Work Opportunity Tax Credit

Empowerment Zone Employment Credits

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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.
 

 

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