Don’t let misunderstandings about WOTC eligibility keep you from taking advantage  of this powerful tax credit.

WOTC today is a far different product than it was a few years back, but many employers do not realize that.

What is WOTC

WOTC The Work Opportunity Tax Credit is a point-of-hire tax credit that can help employers offset the cost of new employees. It was
designed by the government to encourage businesses to hire certain marginalized individuals by helping to offset the costs of training. This
credit ranges from a low of $2400 to a high of $9600.

In a nutshell WOTC assesses the individual and determines the likelihood of that individual getting hired or the government’s desire to see them
hired and assesses a credit for training that individual which is available to the company who employs the person.

If you were looking at 3 equally qualified candidates wouldn’t you want to know if one had a $9600 check in his hand to give you at the time of hiring?

Yet many employers are not taking advantage of the credit because of a variety of mistaken notions. As a result of legislation signed on Dec. 18, 2015, WOTC has been extended through 2019. So let’s bust those misconceptions and get you the money you deserve and the government wants you to have.

Misconception 1: We don’t hire people who qualify

WOTC started life as the Welfare to Work program, and many employers still mistakenly believe that it is limited to welfare recipients. That’s not the case.

WOTC applies to numerous classes of hires, including the following:

• Unemployed veterans (including disabled veterans)
• Temporary Assistance for Needy Families (TANF) recipients
• Supplemental Nutrition Assistance Program (SNAP) recipients
• Designated Community residents (living in Empowerment Zones or Rural Renewal Counties)
• Vocational rehabilitation referred individuals
• Ex-felons
• Supplemental Security Income (SSI) recipients
• Summer youth employees (living in Empowerment Zones)
• Long-term unemployed

When you consider that more than 45 million Americans currently receive food stamps, you begin to understand that more employees qualify for WOTC than you might have thought. But without investigating your workforce, it’s impossible to determine your company’s WOTC eligibility and how many qualifying employees you may have.

Misconception 2: We are required to use paper screening to screen all employees

Historically, in order to gather the required WOTC information and submit it to each state’s labor department, an employee was required to sign Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit.

This process added more of a burden to the hiring manager’s workload and many companies determined that the cost versus benefit was not worth implementing WOTC.

However, in 2012 the IRS began to accept electronic signatures. As a result, companies are now able to screen employees via phone and Web-based processes with each method taking less than five minutes to complete.

The employee electronically signs the required forms necessary to submit and virtually nothing further is required from the employee or employer except confirmation of start date and wage.

 

Misconception 3: WOTC isn’t worth it because it will take forever to receive any benefit

Historically this was true. WOTC had to be renewed on an annual basis. Congress often delayed action on WOTC and other credits until at or even after year-end, and then would implement them retroactively.

At that point, businesses had to scramble to pull together information for the entire year, and the states, which process WOTC applications, would be flooded with a year’s worth of forms all at once.

Delays were inevitable and often very lengthy. Now, WOTC has been extended for five years, and businesses can file in real time, which will speed up processing at the state level significantly

Misconception 4: We’re a flow-through entity—we won’t qualify for WOTC

WOTC is available to most entities, not just C corporations.

Partnerships, S corporations and other flow-through entities are eligible.

 

Misconception 5: It’s illegal to even ask employees if they qualify—or, if not illegal, at least intrusive

This is a legitimate but not insurmountable concern. Yes, asking applicants if they fall into some of the WOTC categories during the hiring process would violate employment law, but this is not an insurmountable issue.

Many companies work with outside vendors to screen and process WOTC applications. Most vendors use phone or online tools that allow employees to self-identify their classification. The vendor then processes and submits Forms 8850 and 9061 for the employer.

This is the approach recommended by. and preferred by, GMG. In fact many of our WOTC clients are staffing agencies as they know that the credit in place can be a boon in helping someone get hired.

The amount of the credit you can receive for any given employee depends on WOTC category, compensation and other factors, but can range as high as $9,600 for some disabled veterans.

Go here to see what WOTC credit you could get