Have you heard about the Work Opportunity Tax Credit (WOTC)? If you are an employer, this is beneficial information you need to assist in increasing diversity and equal opportunities in your workforce.
This Federal tax credit is available to employers interested in hiring those target groups who face extreme barriers to employment. The Consolidated Appropriations Act, 2021 (Section 113 of Division EE P.L. 116-260) authorized the extension of the WOTC until December 31, 2025.
Some of the targeted groups include qualified (veterans, ex-felons, summer youth employees, Supplemental Security Income and long -term unemployment recipients). To qualify for the tax credit, employers must prescreen and obtain certification from a State Workforce Agency (SWA) verifying prospective employees meet the qualifications. On or before a job offer is made, Form 8850 must be completed by both the employer and the job applicant and submitted within 28 days after applicant starts the job.
Taxable employers can claim the WOTC after the required certification is received. They may claim the credit (generally a maximum of $2,400) as a general business credit using Form 3800. The credit is equal to 25% percent of the eligible employee's wages, and the employee must work at least 120 hours for the employer to receive credit. The credit, however, is limited to the business's income tax liability or Social Security tax owed.
To learn more about the WOTC program and how to apply, trust CEO and Founder Lakeesha V. Browne, CPA to help. Send your questions here or schedule a consultation today.
