Taxes can be a difficult task to master, but with the right knowledge and follow through, they can be incredibly beneficial to your company. Not only are the proper tax procedures a legal matter, they are also vital in getting the most out of your business. One example of a tax credit that plays a beneficiary role in many businesses is the WOTC. The WOTC (Work Opportunity Tax Credit) can help you make the most of your finances easily and effectively.
Definition
The WOTC (Work Opportunity Tax Credit) is a tax credit available to employers who hire and retain individuals from target groups with significant barriers to employment, such as veterans. The tax credit is dependent upon number of eligible employees, hours worked, and wages paid to individuals within their first year of employment.
Benefits
The WOTC serves several different benefits to employers who take advantage of it. First, it provides a potential for a reduced tax liability, up to over $9,000 per eligible employee hired. Second, the WOTC reduces the cost of business for an employer, while requiring little paper work and helping those in need of good jobs retain employment. Lastly, the WOTC helps to stimulate and boost the U.S. Economy, which in turn helps increase small business productivity and growth.
Eligibility
To be eligible to receive the WOTC, an employer must hire and retain certain individuals that fit categories listed under the WOTC Target Groups, and those employees must work a minimum of 120 hours in their first year of employment. Some of these groups of people include; Veterans, Long-Term or Short-Term Temporary Assistance for Needy Families Recipients, Supplemental Nutritional Assistance Program Recipients, Designated Community Residents, Vocational Rehabilitation Referrals, Ex-Felons, Supplemental Security Income Recipients, and Summer Youth Employees.
Application
The process of applying for and receiving WOTC benefits is simple, as long as you have the correct paperwork from the State Workforce Agency (SWA) proving that your new hire falls under one of the WOTC Target Groups. After you have this, you will be able to complete the process by completing the IRS Form 8850 and the ETA Form 9061, and submitting those forms to your SWA. Once you have done that, you will be issued a Final Determination from the SWA about your WOTC status, and then you will be able to file for the credit with the IRS. Like with any tax information, be sure to keep thorough and detailed records for your own use and reference.
The WOTC can be a powerful tool for you and your business, so ensure that you are getting all that you can from your taxes by getting started with the process today.
For more information on the WOTC or other tax credits, contact Evolve Financial.
