Time is running out on a possible funding source for small businesses.
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
WOTC expert Ezrie Yellin clarified that, “target groups consist of people who are disabled Veterans, Veterans who receive SNAP benefits, long term and short term recipients of TANF, Designated Community Residents, SNAP receivers, vocational rehabilitation referred individuals, summer youth, ex-felons and Veterans who are unemployed.”
“WOTC is available is available to any employer in the United States, US Virgin Islands and Puerto Rico that pay income tax,” Yellin continued.
“When applying for WOTC, the employer must identify the prospective qualifier on, or before, the job offer,” Yellin explained, “All of the forms must be sent to the state within 28 calendar days of the employee’s start date; the individual must be hired in order to apply.”
Certifications for approval or denial can take a couple of months or longer depending on the state.
Yellin emphasizes, “Not everyone who appears to be eligible will be certified as eligible.”
Yellin stated, “WOTC is open year round. The program expired in 2013 due to it not being renewed by Congress.”
Yellin continued, “However, all companies had to continue to screen without any assurance of receiving anything, ever!”
Recently, the IRS put out a notice that the WOTC program was renewed for 2014.
Yellin elaborated, “Because the program was on hiatus, a lot of employers were not applying or screening new hires who might have qualified them for the tax credit.”
IRS just published a notice of transition relief for WOTC, meaning that employers have additional time to submit their requests for 2014 WOTC certification.
Yellin explained, “The application process has been opened for any new hire, if they hired a member of a targeted group between January 1, 2014 and December 31, 2014. Employers can submit the necessary paperwork up until April 30th 2015.”
Applying for the WOTC can benefit an employer in many ways.
Yellin stated, “Employers generally can earn a tax credit 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.”
He continues, “Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours.”