Unlock Savings for Your Business with the Work Opportunity Tax Credit (WOTC)

Written By Rachel Ratliff

Running a business means juggling priorities, but one thing you don’t want to overlook is the opportunity to save on taxes while making a meaningful impact. The Work Opportunity Tax Credit (WOTC) is a federal incentive designed to encourage employers to hire individuals from specific target groups facing barriers to employment. Here’s how it works and why your business should take advantage of it.

What is the WOTC?

The WOTC is a federal tax credit available to businesses that hire individuals from certain eligible groups. These groups include:

  • Veterans

  • Long-term unemployed individuals

  • SNAP (Supplemental Nutrition Assistance Program) recipients

  • Individuals with disabilities

  • Ex-felons

  • And others who may face challenges entering or re-entering the workforce.

By hiring from these groups, your business not only contributes to improving employment opportunities but also benefits from valuable tax savings.

How Much Can Your Business Save?

The tax credit ranges from $1,200 to $9,600 per eligible employee, depending on:

  • The specific target group of the employee.

  • The number of hours worked.

  • The employee’s first-year wages.

This credit can significantly offset your tax liability, making it a win-win for businesses and employees alike.

How to Qualify for the WOTC

1️⃣ Screen Applicants: Use IRS Form 8850 to determine whether a new hire qualifies for the WOTC. This form must be completed within 28 days of the employee’s start date.

2️⃣ Submit for Certification: Send the completed form to your State Workforce Agency (SWA) for certification. They will verify the employee’s eligibility.

3️⃣ Claim Your Credit: Once certified, claim the credit using IRS Form 5884 when filing your business taxes.

Pro Tips for Maximizing the WOTC

  • Keep Detailed Records: Ensure all forms and documentation are accurate and submitted on time.

  • Consult a Tax Professional: They can help identify eligible hires and navigate the application process.

  • Integrate WOTC Screening: Add WOTC screening into your hiring process to identify potential savings upfront.

Why the WOTC Matters

Beyond the financial benefits, the WOTC reflects your commitment to building an inclusive and supportive workplace. It’s an opportunity to give back to your community by providing meaningful employment opportunities to those who need them most.

Ready to take advantage of the WOTC? Contact us to learn how we can help streamline the process and maximize your savings!

Need assistance with the WOTC process? Let’s talk! Book a consultation today.

#TaxCredits #SmallBusinessTips #WOTC #InclusiveHiring #BusinessSavings


Rachel Ratliff
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