A Crash Course on WOTC: Here's How Your Business Could Save Thousands in Hiring Costs

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Hiring is expensive. Finding good talent is difficult. Needless to say, building a team of high performing employees isn’t exactly a walk in the park.

As a hiring manager, you’re always on the lookout for resources to make the process easier (hey, aren’t we all?). And there are a lot of solutions out there: Applicant Tracking Systems, mobile optimized recruitment campaigns, and boosted job ads to name a few. But what if I told you that you could potentially reduce your hiring costs by thousands of dollars for free?

Sounds too good to be true, doesn’t it? But it’s real, legit, and totally attainable – we can vouch for it! We’ve done our homework on this fantastic program so you don’t have to… read on to learn more.

So, what is WOTC?

WOTC – or the Work Opportunity Tax Credit – is a tax credit program run by the U.S. government. Its purpose is to encourage employers to hire individuals who are part of certain disadvantaged groups.

These individuals include:

  • Unemployed veterans, including veterans with disabilities
  • Temporary Assistance for Needy Families (TANF) recipients
  • Supplemental Nutrition Assistance Program (SNAP, Food Stamp) recipients
  • Designated Community Residents (DCR) living in Empowerment Zones or Rural Renewal Counties
  • Vocational Rehabilitation (VR) referred individuals
  • Ex-felons
  • Supplemental Security Income (SSI) recipients
  • Summer Youth Employees living in Empowerment Zones

Depending on the target group your new hire falls under and their unique situation, your business may be eligible for a tax credit between $1,200 and $9,600. The only catch? They must work a minimum of 120 hours in their first year of employment for your business to qualify for the tax credit. That’s quite the incentive, considering the fact that turnover costs can reach $3,200+ for a single employee earning $10/hr!

Naturally, the more your new hire works over their first year, the more your return will increase. After completing the minimum 120 hours of work, you can claim a credit equal to 25% of the new hire’s first year of qualified wages. After 400 hours, you can claim a tax credit equal to 40% of their first year of wages.

For example: a SNAP (food stamp) recipient who can earn $6,000 in their first year of employment can translate to a max $1,500 tax credit after 120 hours of scheduled hours, and a max $2,400 tax credit after 400 hours of scheduled hours.

I’m in. How do I get started?

No matter how experienced you are in your line of business, it can still feel pretty daunting to dabble in government paperwork. However, the benefits of setting up your business with WOTC are well worth it.

Luckily, there are lots of awesome services that can provide support during the set-up process, and even optimize your hiring process to maximize your WOTC return. Here’s what you can expect:

Step 1: Power of Attorney. If you’re working with a service that is helping you with your WOTC documentation, you’ll need to submit a Power of Attorney so they can file forms for you on your behalf! While this is an extra step at the beginning, it will save you hours of paperwork during the hiring process, leaving you more time to focus on training your brand new hire.

Step 2: Make your next hire. Now that you have everything in place, it’s time to recruit a new employee! Should your new hire fall under one of the WOTC categories, you can move forward with the tax-credit process.

The biggest drawback to this process, obviously, is the fact that most employers won’t be able to determine a candidate’s WOTC candidacy until after they’re hired. Luckily, HigherMe has a fantastic solution: by integrating with your hiring process, we can identify WOTC-eligible candidates right at the application stage. This way, you can take their status into consideration when you’re making your final hiring decision, allowing you to hire amazing people while maximizing your tax-credit return. Click here to learn more!

Step 3: Submit your paperwork. Once you have your WOTC hire, it’s time to hit the paperwork. These documents must be submitted within 28 days of your new hire’s start date, so the onboarding period is the best time to get these out of the way.

There will be a few additional pieces of paperwork that you and your new hire will need to fill out, including a Pre-Screening Notice and Certification Request for WOTC and an Individual Characteristics Form.

Once you’ve submitted this information, the State Workforce Agency (SWA) will review your request and issue an approval if your new hire meets all the criteria for the rebate. (In some cases, you may be asked to provide additional documentation before they make their final decision.) Once you receive approval, you’ll be all set to claim the tax credit through the IRS!

Ready to start with WOTC? Connect with our team at contact@higherme.com, or check out our Employer Page!

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