Making Stimulus Dollars Count with the WOTC Program

To keep the economy afloat throughout the pandemic, the U.S. government has initiated government relief and stimulus packages that are expected to cost $6 trillion. To make this huge sum more comprehensible, let’s view the magnitude of a trillion from another perspective:

1 Million Seconds = 11.6 Days

1 Billion Seconds = 32 Years

1 Trillion Seconds = 31,688 Years

Applying the timescale above, 6 trillion seconds would equal 190,128 years! Let that sink in for a moment. While it may be easy to grasp the idea of $1 million, $6 trillion is just mind-blowing.

Most businesses have benefited from numerous tax credits as part of COVID-19-related stimulus programs under the CARES Act, such as the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC). But, with so many forms of assistance out there meant to support the recovery, many companies might be forgetting to take advantage of other options.

One potential solution that shouldn’t be overlooked is the Work Opportunity Tax Credit (WOTC) program, which has actually been around since 1997. WOTC can be a powerful tool in expanding your payroll and getting people to work, so now is the ideal time to ask whether or not you’re maximizing the program to its fullest.

What Is the WOTC and Who Is Eligible?

The WOTC is a program designed to encourage businesses to hire individuals from certain demographic groups. It allows employers to receive a federal tax credit for hiring from eligible groups of people who have historically faced employment barriers. The groups covered include:

  • Unemployment recipients
  • Qualified veterans
  • Designated community residents (DCR)
  • Supplemental Nutrition Assistance Program (SNAP) recipients
  • Supplemental Security Income (SSI) recipients
  • Qualified ex-felons
  • Summer Youth Employees
  • Vocational rehabilitation referrals
  • Long-term Family Assistance recipients

Depending on the target category, credit values can total as much as $2,400 to $9,600 per qualified employee, and there is no limit to the total credit amount an employer can claim.

Why Now Is the Best Time To Remember and Use WOTC

The U.S. is experiencing a K-shaped economic recovery, which means that industries are bouncing back at different rates. Some are doing quite well, while others are still clawing back. The same is true of the general population. In many instances, wealthy people have gotten wealthier, while disadvantaged individuals are experiencing even greater hardship.

As the wealth gap expands, the number of people who fall into one or more WOTC groups increases. At the same time, as people venture back into their normal habits and increase demand for goods and services, companies need to proactively address labor shortages without breaking the bank. Even though there are other programs wrapped up in the stimulus package that you can — and should — utilize, WOTC is one of the most effective and accessible. It can help you stabilize and grow your organization, enable workers to regain their livelihood, and put money back into the markets.

What’s Happening With WOTC-Related Legislation

The Consolidated Appropriations Act of 2021 extended the WOTC program through December 31, 2025, giving businesses time to take full advantage and maximize the amount of credit they earn.

There are also two bills currently in Congress with the purpose of expanding the benefits to employers. One of them, the HERO for Youth Act, would temporarily increase the value of the WOTC. Currently, the WOTC provides a tax credit of 40% of the first $6,000 in wages in the first 12 months of employment. The new bill proposes increasing that credit to 50% of the first $10,000 in wages in both the first and second year of employment.

The second bill, the Hiring Incentive to Return Employment (HIRE) Act, would temporarily suspend the restriction against claiming WOTC credits for rehires, allowing employers to earn credits if they bring back former employees.

It’s important to understand how the WOTC works in conjunction with other hiring tax credits. Many business owners consult with reputable tax credit experts for assistance in calculating their WOTC and integrating it with other federal government incentives. Getting the right guidance helps employers avoid double-dipping in certain programs such as the ERC, resulting in potential delays or fines, while maximizing the impact of their WOTC program.  It also helps them ensure they capture the credits they are entitled to without distracting their hiring staff from their core responsibilities.

Get More Right Now With WOTC

Presently, the government is providing many different programs to get the economy back on its feet. To receive the largest amount of support, don’t disregard included programs that might have existed before the pandemic. The WOTC is one of the most useful and available programs, so if you haven’t explored it yet, don’t continue to wait.

 

 

 

 

 

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