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WOTC: Work Opportunity Tax Credits

Big Fish Payroll Services wants to work with our current clients and new clients to manage their company’s Work Opportunity Tax Credits (WOTC). WOTC, a federal incentive program has two purposes to promote the hiring of individuals who face employment barriers and to provide federal tax credit to employers who hire these individuals. Big Fish’s WOTC program allows employers to gain very valuable tax credits from $1,200 to $9,600 per eligible employee.

How are Tax Credits Calculated?

The Work Opportunity Tax Credit (WOTC) is not one but several tax credits given to employers for hiring certain individuals who meet specific criteria. The amount of tax credit you can claim depends on several factors:

  • The targeted group the newly hired employee belongs to
  • The wages paid to that individual in the first year of employment, and
  • The number of hours worked during that first year.

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What companies are eligible for WOTC?

  • Any private sector employer that hire employees from eligible groups.
    • Certain tax-exempt organizations can take advantage of WOTC by hiring eligible veterans and receiving a credit against the employer’s share of Social Security taxes
  • The incentive is only for the employer and is not shared with the employee. The program was developed to help underrepresented persons gain employment
  • Employers may claim the Work Opportunity Tax Credit for one or two years depending on the target group. Employers who do not take the full credit amount because of the tax liability limitation may carry back the unused credit one year and carry forward the unused credit 20 years or until the credit is used, whichever comes first.

Benefits of WOTC

  1. Save Money & Maximize Profits
    • Reduce your Federal tax liability by capturing credits
    • Increase cash flows with tax credits
    • Allows you to invest resources in your company and employees
  2. Lower Recruitment Costs
    • Cut down on recruiting costs with paperless onboarding + WOTC compliant procedures
  3. Help your community & the economy
    • WOTC helps remove the barriers for employment by offsetting the cost of hiring and training
    • Reducing the unemployment rate