Article: What You Need to Know About WOTC Retro Guidance and Extension
Since first implemented, the Work Opportunity Tax Credit program, or WOTC, has helped countless companies to benefit from significant tax incentives when they hire individuals from groups that typically face barriers to finding employment. The result is that companies that hire WOTC-eligible employees can earn an income tax credit of up to $2,400 per hire for most target groups and up to $9,600 for some select categories. Not only can employers save money in their hiring costs, but they can also help out the larger community by connecting qualified veterans, individuals on government assistance programs and others who historically find it difficult to land a job with meaningful employment.
View full Corporate Compliance Insights article – “What You Need to Know About the WOTC Retro Guidance and Extension”
Here are some of the highlights from the article:
- PATH Act Expands and Extends WOTC – While there are many benefits to this program, it is not a permanent fixture in the tax code. WOTC has been reinstated for another 5 years, including 1 retroactive year.
- Introduction of a new target group – The PATH Act expands the WOTC program by adding an additional target group for qualified long-term unemployed individuals.
- New opportunities to capture missed credits – Due to uncertainty around the prolonged WOTC hiatus and resulting impact on employer’s hiring and tax planning strategies, the IRS has provided a ‘transition relief’ period that offers a chance to capture more than a year’s worth of tax credits.
- Identifying eligible employees – To properly identify which employees are eligible, it is important to have an effective screening process that screens ‘everyone’.
- Verifying eligibility – You’ll need to verify that the employee is a part of a WOTC-targeted group. It’s best practice to conduct this step effectively is to collect documentation from a third-party to show the individual does in fact qualify for the credit.
- Tracking and reporting – It’s essential to track and report both the progress and results of your WOTC program, in order to continually improve how your organization screens it’s eligible employees and maintains compliance.
View the article to learn more about these considerations and best practices to support your organizations efforts to improve their Work Opportunity Tax Credit screening program, increasing your tax credit income.
Contact us with any questions or requests for additional information.
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