Manufacturers, Are You Taking Advantage of Work Opportunity Tax Credits?March 15, 2016
In the process of recruiting or hiring? The PATH Act has extended WOTC—don’t miss out on your chance to save.
Is your company availing itself of all tax credits that are available? There are federal tax credits open to companies in the process of hiring individuals in certain groups of the population, like disabled veterans and government assistance recipients (i.e. food stamps). Research has shown that millions of dollars go unclaimed every year when it comes to the Work Opportunity Tax Credit (WOTC). Make sure you are aware of this important opportunity for your business to save on employment costs!
Who can claim?
There are different rules regarding the WOTC, or Job Creation Tax Credit, depending on the state in which you do business. Generally speaking, the credits are available when hiring:
- Veterans (including disabled vets)
- Temporary Assistance for Needy Families (TANF) recipients
- Those receiving supplemental security income (SSI)
- Food stamp recipients
Note that the credit must be claimed within 28 days of the new hire’s start date. Since the reasons for WOTC eligibility are very personal and sensitive in nature, it is wise to screen all new hires to be aware of who qualifies for the program.
What is the amount of the deduction?
Federal hiring credits can range from $2,400 to $9,600 depending on your employee’s circumstances. The credits can be used to offset the cost of recruiting, hiring and retaining the employees mentioned above. This means that for hiring:
- Disabled or unemployed veterans, employers will receive up to $9,600 for that first year of a veteran’s employment.
- A long term recipient of TANF, $4,000 is available in the first year,
- All other target groups- $2,400 in the first year.
Does the recent PATH Act have any effect on WOTC?
As mentioned briefly in our recent blogs, the President has signed the extension of the program through 2019, which clearly will have a positive impact on employers.
Download our eBook for more information on what else has been extended or made a permanent part of the tax code under the PATH Act.
Contact us for more information and guidance on claiming these credits.