We’re all aware that Congress recently passed the American Taxpayer Relief Act to keep us from falling off the fiscal cliff. What you may not realize is that it includes an extension of the Work Opportunity Tax Credit (WOTC).
Are you taking advantage of this enormous cost savings for your business? If not, you should be!
What is the Work Opportunity Tax Credit (WOTC)?
- WOTC provides employers with a credit on federal taxes of up to 50% of a new hire’s annual wages, with the maximum for certain groups set at $9,600.
- It applies to targeted groups consisting of several economically disadvantaged job seekers.
- WOTC credits apply to people receiving public assistance, such as TANF or people ages 18-39 on food stamps. It also applies to ex-felons, and those on disability or SSI.
- Exceptions are for relatives, former employees, or undocumented workers.
Recent bill makes WOTC retroactive to 2012:
At the end of 2011, Congress failed to renew WOTC for 2012. However, under the Vow to Hire Heroes Act of 2011, WOTC was extended for unemployed veterans and those with service connected disabilities.
The recent passage of the tax bill authorized tax credits for all of the previous target groups through 2013. Even better, it appears to be retroactive to 2012!
How to take advantage of the Work Opportunity Tax Credit:
To utilize this tax credit, visit Employment Security’s website. It provides instructions on how your business can claim a tax credit. Note that you must send in an application within 28 days of the employee starting their job.
You can also visit the Department of Labor’s WOTC page for more info.
It appears that the details for this new extension are still being worked out. In the meantime, continue to submit your WOTC certification forms for your new hires. When the structure is in place, it’s anticipated that tax credits will be processed retroactively to January 1, 2012.
The wrap-up:
Don’t leave money on the table! These tax credits are fairly simple to apply for, and come right off the business’s federal tax obligation. You don’t need to hire someone to process WOTC forms for you. It’s all right there on ESD’s website.
If you’re doing your part in this economy to put people back to work, you might as well reap this financial reward from the government!