Understanding the Work Opportunity Tax Credit

According to the U.S. Bureau of Labor Statistics, the unemployment rate continues to be historically low, ranging from 4.0% to 4.3% from May to November of 2024. With today’s hiring challenges, business owners should be aware that the Work Opportunity Tax Credit (WOTC) is available to employers that hire workers from targeted groups who face significant barriers to employment. The tax credit is generally worth as much as $2,400 for each eligible employee (higher for certain veterans and “long-term family assistance recipients”). It’s generally limited to eligible employees who begin working for the employer before January 1, 2026. To satisfy a requirement of the WOTC, a pre-screening notice must be completed by the job applicant and the employer on or before the day a job offer...

Work Opportunity Tax Credit Provides Help to Employers

In today’s tough job market and economy, the Work Opportunity Tax Credit (WOTC) may help employers. Many business owners are hiring and should be aware that the WOTC is available to employers that hire workers from targeted groups who face significant barriers to employment. The credit is worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). It’s generally limited to eligible employees who begin work for the employer before January 1, 2026. The IRS recently issued some updated information on the pre-screening and certification processes. To satisfy a requirement to pre-screen a job applicant, a pre-screening notice must be completed by the job applicant and the employer on or before the day...

Taking Advantage of the WOTC (Work Opportunity Tax Credit)

Background Businesses are having difficulties hiring an adequate number of employees as the economy resets after the COVID-19 lockdowns and their aftermath.  As such, small businesses are having to think outside the box as they work toward locating amenable workers.   If your small business hires a "targeted group" member, you are afforded the ability to claim the lucrative federal Work Opportunity Tax Credit (WOTC) for a portion of wages paid to such an individual. CAA 2021 Changes Within the Consolidated Appropriations Act of 2021 (signed into law on 12/27/20) was the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTRA 2020).  TCDTRA 2020 extended the WOTC to cover qualified first-year wages paid to eligible new hires who begin work by 12/31/25. This means that the hiring and paying...

Work Opportunity Tax Credit Extended Through 2025

Are you a business owner thinking about hiring? Be aware that a recent law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a tax credit known as the Work Opportunity Tax Credit (WOTC) that’s worth as much as $2,400 for each eligible employee ($4,800, $5,600 and $9,600 for certain veterans and $9,000 for “long-term family assistance recipients”). The credit is generally limited to eligible employees who began work for the employer before January 1, 2026. Generally, an employer is eligible for the credit only for qualified wages paid to members of a targeted group. These groups are: Qualified members of families receiving assistance under the Temporary Assistance for Needy Families (TANF) program, Qualified veterans, Qualified ex-felons, Designated community residents, ...

WOTC Extended Through 2020

If you’re a business owner, be aware that a recent tax law extended a credit for hiring individuals from one or more targeted groups. Employers can qualify for a valuable tax credit known as the Work Opportunity Tax Credit (WOTC).  The WOTC was set to expire on December 31, 2019. But a new law passed late last year sees WOTC extended through 2020. Generally, an employer is eligible for the credit for qualified wages paid to qualified members of these targeted groups: members of families receiving assistance under the Temporary Assistance for Needy Families program, veterans, ex-felons, designated community residents, vocational rehabilitation referrals, summer youth employees, members of families in the Supplemental Nutritional Assistance Program, qualified Supplemental Security Income recipients, long-term family assistance recipients, and long-term unemployed...