WOTC: Wicked Overlooked Tax Credit Extended Through 2025

Business Tax

I know…You’re thinking “the past 18 months have been exhausting, it’s summer, I’m relaxing and Withum has another new tax acronym for me to decode?!”

To that I say: No, my friend…it’s an old tax acronym. One that was going away, but decided to move back home for the next five years; however, unlike adult children moving home, this is good news!

That’s right, your CPA firm who became your BFF through PPP, EIDL and ERTC has yet another APB: the WOTC.

But hang in there! This is not a comprehensive treatise on the Work Opportunity Tax Credit, but rather what you, the business owner needs-to-know, and none of the taxing tax talk. I promise.

The Work Opportunity Tax Credit (WOTC), widely considered an overlooked and underutilized credit, has recently been extended through 2025. Can the WOTC benefit your business? Just answer the following question:

Is it possible (anything > 0% chance) that over the next 5 years you will hire an employee who falls within one the following targeted groups?

  1. Social Security Recipients
  2. Long-Term Unemployment Recipients
  3. Ex-Felons
  4. Vocational Rehabilitation Referrals
  5. Qualified Veterans
  6. Designated Community Residents
  7. Others receiving certain assistance (long-term family, food stamps, IV-A)
  8. Qualified Summer Youth

If the answer is “yes”, call us. If you aren’t sure, call us.

If it’s determined you qualify for the WOTC (or may qualify in the future), great! You are employing those who consistently face barriers to employment. You are stimulating the economy and promoting diversity in the workplace!

Certifying and claiming the credit involves several steps, including:

  1. Adding additional forms to your new-hire package (to properly pre-screen and document the employee meets the requirements of a targeted group).
  2. Sending the info to your local state agency (typically where the employee works) within 28 days
  3. Employing said individual(s) for at least 120 hours (larger credit if over 400 hours)
  4. Based on hours worked and wages paid, obtaining a “general business credit” of up-to $9,600 per employee (during their 1st year of employment)

Easy, right? It really should be, but if it seems like too much red tape, we can connect you with a 3rd party administrator to certify new hires and submit documentation to state agencies. There’s no excuse to ignore this credit and the 28-day certification deadline is impossible to achieve without a proper system in-place before onboarding. Let Withum help you claim the WOTC so you can focus on growing your business and helping others through diverse, open-minded employment practices.

Ok, one more acronym…TLDR: if you hire people, call us and we’ll help you implement a system (whether internal or via 3rd party) to ensure providing opportunities to members of vulnerable groups doesn’t result in lost opportunities by not claiming the WOTC.

Contact our
Withum’s Tax Team to help address your business challenges.

Business Tax Services

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