Work
Opportunity Tax Credit
The
Work Opportunity Tax Credit (WOTC) was created as an incentive
to employers who hire new employees from several different
targeted groups that have historically had difficulty finding
and retaining jobs. The incentives are in the form of tax
credits. The vast majority of certified employees received
welfare (TANF) or food stamps (SNAP) prior to their hire.
Certified employees need to work at least 120 hours to qualify
for a credit. Employees certified for WOTC earn a 25% credit of
gross wages paid once they have worked between 120-399 hours.
After working 400 hours, they earn a tax credit of 40% on their
first $6,000 of gross wages paid during their first year of
employment, up to a maximum credit of $2,400 for short term
benefit recipients.
WOTC Target
Group I
Prior to
January 1, 2007, long term Welfare recipients could be certified
for the Welfare to Work tax credit (WtW) which had a maximum
credit of $8,500 per eligible new hire. Effective 1/1/07, WtW
was merged with WOTC, and the WOTC Target Group I replaced WtW.
The maximum credit was increased to $9,000 per eligible new hire
during their first 2 years of employment. WOTC Target Group I
certified employees earn a 25% credit once they have worked
between 120-399 hours. After working 400 hours, they earn a
credit of 40% on their first $10,000 of gross wages paid during
their first year of employment, up to a maximum first year
credit of $4,000. For WOTC Target Group I certified employees in
their 2nd year of employment, the credit is calculated at 50% of
the first $10,000 of wages paid with a maximum 2nd year credit
of $5,000.
Veterans
Opportunity to Work (VOW)
The Veterans
Opportunity to Work (VOW) Act of 2011 was signed into law on
November 21, 2011 as a way to help veterans find a job and as a
means to offer an incentive to employers who offered veterans
employment. This legislation created a new WOTC target group
with a maximum $9,600 tax credit.
SimTax WOTC Process
Highlights
SimTax
does 99% of the work. It never takes more than a minute
or two per new hire for our clients to participate in this
program. This minimal time investment provides your company with
the opportunity to earn up to a $9,600 credit.
SimTax
provides comprehensive training to your staff, and we provide
thorough compliance reports to ensure your company is receiving
each and every tax credit dollar your are entitled to.
