Amount of Employer WOTC Tax Benefit
For each hired employee who satisfies the WOTC requirements, employers are often eligible for a tax credit ranging from $2,400 to $9,600. The credit amount is determined by the number of hours worked, the kind of assistance benefits received, and the duration of benefits.
This is incorporated into the majority of applicant tracking systems’ current hiring procedures. As it requires employers to ask particular questions that trigger eligibility, businesses will need to activate. Reminder: Within 28 days of the new employee’s date of hire, paperwork must be sent to the IRS and ETA.
More About the Work Opportunity Tax Credit
Under the Work Opportunity Tax Credit, employers can hire eligible employees from the following target groups and receive a tax credit
- Unemployed Veterans (including disabled veterans)
- Temporary Assistance for Needy Families (TANF) Recipients
- Food Stamp (SNAP) Recipients
- Designated Community Residents (living in Empowerment Zones or Rural Renewal Counties)
- Vocational Rehabilitation Referred Individuals
- Supplemental Security Income Recipients
- Summer Youth Employees (living in Empowerment Zones)
The tax credit itself is equal to 25% or 40% of a new employee’s first-year wages, up to the maximum for the target group to which the employee belongs. Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours. The DOL has a handy WOTC Calculator to see how much your business can earn in tax credits which would be extremely helpful if employers were able to submit 8850 documents for the WOTC credits for any hires made in the calendar year.
- DOL WOTC Resource
- Employer IRS 8850 Form
- More About the WOTC (includes legislation)
- VOTC Resources (Veterans Opportunity Tax Credit)