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Business Owners - Are you leaving money on the table?

January 28, 2017

​Each year, millions of dollars in tax credits go unclaimed, even though employers are hiring workers every day from the target groups designated by the Work Opportunity Tax Credit Program (WOTC). The Work Opportunity Tax Credit provides credits ranging from one-time credits of up to $2,400 to two-year credits of up to $9,600 per qualified individual.

The purpose of this credit is to provide an incentive for employers to hire employees from certain targeted groups. These groups consist of individuals who have found it difficult to find consistent employment. The following are some of of the required qualifications in order for an individual to be considered part of a targeted group:

  • Veteran of the Armed Services receiving Disability Compensation and discharged or released from active duty in the past year.
  • A Veteran of the Armed Services entitled to Disability Compensation and unemployed for at least 6 months during the past year.
  • A Veteran of the Armed Services and unemployed at least 6 months during the past year.
  • Member of a family who has received Temporary Assistance for Needy Families (TANF) for at least 9 of the past 18 months.
  • Veteran and member of a family receiving Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) for a 3-month period during the past 15 months.
  • An individual referred from a state-approved rehabilitation agency, Ticket to Work Program or the Department of Veterans Affairs.
  • A person convicted of a felony or released from prison after being convicted of a felony.
  • An individual receiving Supplemental Security Income (SSI) for any month ending during the past 60 days.
  • Any individual unemployed for at least 27 consecutive weeks and who received unemployment compensation during some or all of that time period

In order to ensure that the individual qualified for the credit, there is a process that must be followed to make sure each person hired has passed a pre-screening.

Claiming the Tax Credit - Several different factors are calculated together to determine the credit that the employer can claim on their tax return. These factors include the type of person hired, the total hours the individual works, wages earned, and the length of time that the person remains employed.

If you would like further information regarding this credit you can visit the IRS or contact us.

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