Expanding your company’s team and growing your staff is a rich opportunity to improve your organization’s overall effectiveness. If you are adding new faces to your company, you may be eligible to claim the Work Opportunity Tax Credit (WOTC).
The federal government offers WOTC as an incentive to employers for hiring individuals among certain groups that often face obstacles to employment. If you are hiring a new employee, you may want to keep in mind that by offering someone who falls into one of these groups an opportunity at your organization, you could gain your own opportunity to save on your taxes. The WOTC tax credits can range from $1,200 to $9,600, depending on the employee hired.
Several common groups of individuals qualify, and hiring them would make your business eligible to receive this tax credit. Below are three examples of potential employees who may qualify your business to receive the WOTC.
If the candidate for your company’s open position went through active duty in the U.S. Armed Forces and meets certain other requirements, such as being currently unemployed, then hiring him or her could qualify your company for savings in conjunction with the WOTC. The unemployment rate for veterans is down to 3.3 percent, an improvement from a 3.7 percent veteran unemployment rate in 2017. However, over one million veterans are still unemployed. Over the next five years, an additional one million will be separating from the armed forces looking for work.
Individuals with Disabilities
The federal government also encourages employers to hire individuals with disabilities by offering financial benefits through the WOTC. If your new job candidate has received or is receiving certain rehabilitative services from a state-certified agency, or if he or she has recently received Supplemental Security Income benefits, the tax credit may apply. While many minority groups have seen their employment situation improve in recent years, workers with disabilities still haven’t seen improvements in employment levels. According to the Bureau of Labor Statistics, the unemployment rate for persons with a disability was 9.2 percent in 2017, more than twice that of those with no disability (4.2 percent).
Residents of Certain Communities
Your business may qualify for work opportunity tax savings just by operating in a certain area. The federal government designates certain areas with high unemployment and poverty rates as Empowerment Zones. These zones were created to generate more thriving economies in economically distressed areas. If your company conducts business in one of these areas and your job candidate lives in the same area, you could save money on your taxes just for hiring a local resident. Click here to see your local empowerment zones.
Hiring from these groups can benefit your organization through the WOTC, but they aren’t the only ones. Hiring food stamp (SNAP) recipients, teenagers looking for summer jobs and individuals from other designated groups may also qualify your business for the WOTC credit if they meet certain requirements.
The Work Opportunity Tax Credit can obviously benefit an organization that is looking to hire a new staff member, but requirements and processes can be cumbersome if you are unfamiliar with navigating this area. The WOTC opens doors for tax savings, but what can do you to begin reaping those benefits? That’s where we can help. Our tax experts understand the requirements, collect essential data and identify qualifying opportunities to save you money.
For more information about how your business’s specific situation and if you may be able to receive tax savings through WOTC or other tax credits and incentives, begin the opportunity-discovery process with our Quali-Finder tool.