The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire Americans looking for jobs that have faced specific ongoing barriers to employment. Employers that hire individuals who are in a WOTC targeted group may claim a federal tax credit of up to $9,600 for each qualified new-hire. This is a win-win for employers who are looking to hire workers. If you are opening new locations, experiencing turnover, or growing your business, these tax incentives may provide significant savings for your business.
Great news for all Makai HR clients! Makai HR has partnered with MJA & Associates who provide WOTC tax credit solutions to help clients access this program. Their verification of eligibility process is fully integrated into Makai HR’s HR technology platform. With Makai HR’s assistance, your company can earn tax credits and save money.
Work Opportunity Tax Credit (WOTC) Now Available with Makai HR!
The WOTC has two purposes:
1. to encourage employers to hire individuals who have traditionally had a difficult time seeking employment and
2. to provide a federal tax credit to employers who hire these individuals.
Makai HR’s Prism HRIS platform is integrated and can help automate the process of verification of eligibility, compliance with WOTC guidelines, records retention, completion of Appeals Process on denied claims, etc. During the onboarding process, the form would be automatically sent to the new employee. This process is used to provide “pre-screening” to determine if they are eligible for the program.
Here is a list of targeted groups who qualify under the WOTC program:
- Qualified IV-A recipient
- Qualified veteran
- Ex-felon
- Designated Community Resident (DCR)
- Vocational rehabilitation referral
- Summer youth employee
- Supplemental Nutrition Assistance (SNAP) recipient
- Supplemental Security Income (SSI) recipient
- Long-Term Family Assistance recipient
- Qualified long-term unemployment recipient
Things to know about the WOTC program:
- WOTC is authorized until December 31, 2025.
- In order to claim the tax credit, employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with Hawaii’s workforce agency within 28 days after the eligible worker starts work. The purpose of this form is to receive certification that the new hire is a member of a targeted group.
- Taxable employers will claim the WOTC as a general business credit against their income taxes, limited to the amount of their income tax liability. Tax-exempt employers will claim the WOTC against their payroll taxes, limited to the amount of employer Social Security tax owed on wages paid to all employees for the period the credit is claimed.
- Taxable employers will claim the tax credit as a general business credit on Form 3800 while qualified tax-exempt organizations will claim the credit on Form 5884-C.
- Please note that many states are understaffed, which is causing a delay with certificates being issued. Some states are taking longer than one year to approve an application and issue certification. Employers should keep this in mind when forecasting their budget and tax planning. The sooner you start the program, the sooner your company will start increasing profits!
Makai HR is here to help
Let us help with administering the WOTC program while you focus on running your business. If you are interested in learning more about the WOTC program, please reach out to your account manager. We’re more than happy to schedule a time at your convenience to discuss this opportunity in more detail.
This program is one example of the many benefits of partnering with a PEO for your HR needs. Contact us today to learn more about how we can help support your business.