Travel Far with the Work Opportunity Tax Credit
Authored by Karlee Hubble, CLA WOTC Practice Director
Background and Overview
The Work Opportunity Tax Credit (WOTC) is an underutilized resource within the transportation industry. It allows employers to reduce their federal tax liability by up to $9,600 per eligible employee when they hire people from targeted categories and employ them for at least 120 hours in their first year of employment. Many employers either don’t know about the credit or they don’t know the necessary steps to claim the credit, but if they hire from eligible groups of employees, and follow the compliance steps, they can enjoy savings on their tax returns. To claim the credit, an employer needs to update their onboarding process with a few steps so that a new employee can voluntarily disclose that they fall into one of the groups.
Eligible Employee Groups
- Long-term unemployment recipients (27 consecutive weeks or more)
- Short-term Temporary Assistance for Needy Families (TANF)
- Qualified veteran (discharged from active duty within one year of hire date)
- Disabled veteran
- Unemployed disabled veteran
- Unemployed veteran (four weeks)
- Unemployed veteran (six months)
- Qualified ex-felon
- Designated resident of a Rural Renewal County or Empowerment Zone (EZ)
- Vocational rehabilitation referral
- Food stamp recipient (Supplemental Nutrition Assistant Program or SNAP)
- Supplemental Security Income (SSI) recipient
- Long-term family assistance recipient
- Summer youth employee
Hiring Requirements
WOTC is applicable to temporary, seasonal, part-time, and full-time new hires who work at least 120 hours in their first 12 months of employment. An application must be submitted to the state workforce agency within 28 days of hire.
CLA’s WOTC Services
Taking advantage of tax credits can be a full-time job. CLA works with employers to identify eligible employees, collect supporting information, submit the required tax forms, and compute the dollar amount of the credit. We integrate technological solutions into the hiring process to minimize the time spent collecting the data. Our innovative, automated process will help create efficiencies and allow you to focus on running your business.
Additional Resources
Work Opportunity Tax Credit Services
Nathan is a CPA and has more than ten years of experience providing tax planning, consulting and compliance services to a number of privately held businesses and individuals in a variety of industries, with a special focus on the transportation and logistics industry. He actively communicates with clients and seeks ways to align their individual and business goals with available tax strategies to allow them to make well-informed decisions.
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