The Work Opportunity Tax Credit (WOTC) is an incentive created by the US government to encourage businesses to hire individuals from certain target groups that have historically faced difficulties in gaining employment. Eligibility for this tax credit is targeted towards veterans, ex-felons and other economically disadvantaged individuals.
In this blog post, we explore how hiring veterans can give your business access to the WOTC, as well as all of its associated benefits. We discuss who qualifies for WOTC and why veteran employment should be encouraged. We also provide tips and advice on how you can create a successful veteran hiring plan when claiming WOTC.
What is the Work Opportunity Tax Credit (WOTC)?
The purpose of WOTC is to promote job creation and reduce poverty by providing tax credits to employers that hire members of specific target groups, such as veterans. The credit reduces taxable income, resulting in more money left over that can be used toward growing a business or reinvesting into other areas of operations.
There are two levels of credit available: Federal level which covers up to 40 percent of qualified wages up to $6,000 per employee; and state level which varies by location but generally offers a slightly higher percentage than federal with a maximum amount up to $9,000 per employee. To qualify for this tax break, employees must meet certain criteria specified by the Internal Revenue Service (IRS).
Who Qualifies for WOTC?
The list of people who qualify for the WOTC includes various categories such as veterans, disabled individuals, ex-felons, Supplemental Nutrition Assistance Program (SNAP) recipients and others who have traditionally struggled with employment opportunities due to various socioeconomic factors. Eligibility for these tax breaks are determined primarily on individual circumstances and income level at time of hire.
For example, if you are looking to hire Veterans specifically then they must have been either unemployed or underemployed (working less than 20 hours per week) over a designated period before being hired by your company in order to qualify under WOTC regulations. This also applies if they were previously employed on military bases where wages may not reflect their true potential earnings off base due to reduced cost-of-living factors inherent on military bases. Additionally only veterans discharged within one year prior also qualify for consideration under WATC regulations as long as variables such as income remain valid.
Why Should Your Business Consider Hiring Veterans?
There are several reasons why hiring veterans makes sense for any business looking reap the full benefits that comes with claiming the WOTC like reduced taxable income and increased profits.. Firstly it helps support those who have served our country honorably; secondly it provides opportunity those seeking gainful employment regardless of recent events such as ending active duty status or immigration status; lastly it can provide a highly skilled workforce with great qualifications acquired in service compared civilian positions provided these skills are transferable between industries.. All these reasons help offer an attractive option that few businesses can refuse while simultaneously giving them an advantage over competitors regarding profitability.
Creating an Effective Veteran Hiring Plan To Claim The Work Opportunity Tax Credit
When creating your veteran hiring plan there are several factors you need consider when seeking claim the full benefit offered through claim the full benefit offered through the WOC program — which include but not limited : recruiting strategy selection strategy onboarding process eligibility determination paperwork requirement understanding.
First step should always researching exactly what criteria has been set forth determining eligibility so understand exactly what kind individuals your company should consider recruitment process.. You may find useful consult Internal Revenue Service website using words “target Groups” search function order get greater insight into specifics behind qualification criteria.. Next develop recruitment processes based upon qualifications necessary still meeting goals other initiatives business has set forth time such customer service performance sales numbers etc… Developing relationships local organizations work closely both former active duty personnel their families good start ensure steady flow applications recruitment needs reoccur throughout year cycle .. Once received all necessary paperwork verify accuracy making sure meets both criteria required state ask clarification needed ensure compliance .. During onboarding process new hires important explain all terms conditions outlined employee agreement make sure understands import rules regulations expected him/her behave follow code conduct maintaining standard excellence organization prides itself .. Lastly regular tracking reporting will happen critical audit trail maintained case IRS ever questions transactions made.
Conclusion
Claiming Work Opportunity Tax Credit provides huge advantage any business looking increase profitability while giving back community honorable efforts armed services making effort recruit veteran employees key financial success any organization today. Taking time research understand entire process create effective plan implementation worth extra effort put forward because long run rewards far outweigh upfront costs associated process itself.