At ABIS we’ve made it easier than ever to determine if a new employee may qualify under the WOTC Tax Credit. We offer three separate screening options (or even a combination of all three) at no extra cost to you:
- Web-Based Secure Electronic Form. Ten easy questions (with translation available). Include as part of your onboarding process. Accessible via browser or mobile phone, and can integrate with your Applicant Tracking Software or Electronic Onboarding.
- 24/7 Bi-Lingual Call Center. If employee is remote, or does not have access to a cell phone or web browser they can call our friendly call center for screening. Takes 3-4 minutes
- Mail Us Your Paper Forms. ABIS customizes the WOTC Questionnaire and simplifies it for your new hires. Simply mail us your forms within the 28-day window.
ABIS screens every new hire for eligibility, so you don’t have to. We also automatically check addresses and zip codes to determine eligibility for Enterprise Zone credits.
Whether you have one location or one thousand, ABIS can support your team. Our mission is to find you WOTC tax credits, and make it both easy and convenient for you, and your new hires as possible.
WOTC Renewed Through 2019! Ten eligible categories:
- Qualified Veteran. A veteran who is: a member of a family that received SNAP benefits (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date; or entitled to compensation for a service-connected disability and who is hired within one year of discharge or release from active duty in the U.S. Armed Forces, or entitled to compensation for a service-connected disability and unemployed for a period or periods totaling at least 6 months of the year ending on the hiring date.
New Unemployed Categories:
unemployed for at least 4 weeks, but less than 6 months, unemployed for at least 6 months
Other Target Groups
The legislative authority for the WOTC program’s non-veteran groups is renewed through December 31, 2019. For an employee to be certified as an eligible group member by a State Workforce Agency, the new hire must belong to one of the following target groups:
2. Long-term TANF Recipient. A member of a family that: Received Temporary Assistance to Needy Families (TANF) payments for at least 18 consecutive months ending on the hiring date, or Received TANF payments for any 18 months (whether or not consecutive) beginning after August 5, 1997, and has a hiring date that is not more than two years after the end of the earliest 18-month period after August 5, 1997, or Stopped being eligible for TANF payments during the past 2 years because a federal or state law limited the maximum time those payments could be made.
3. Short-term TANF Recipient. A member of a family that received TANF benefits for any 9-month period during the 18-month period ending on the hiring date.
4. Supplemental Nutrition Assistance Program (SNAP) Recipient. An 18-39 year old member of a family that received SNAP benefits for the 6 months ending on the hiring date, or received SNAP benefits for at least 3 of the 5 months ending on the hiring date.
5. Designated Community Resident. An 18-39 year old who lives within one of the federally designated Rural Renewal Counties. Note: The Summer Youth group is no longer a target group.
6. Vocational Rehabilitation Referral. An individual with a disability who completed or is completing rehabilitative services from a State certified agency, an Employment Network under the Ticket to Work program, or the U.S. Department of Veterans Affairs.
7. Ex-Felon. An individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison.
8. SSI Recipient. A recipient of Supplemental Security Income (SSI) benefits for any month ending during the past 60-day period ending on the hire date.
9. Long-Term Unemployment Recipient. An individual who has exhausted their regular unemployment compensation (the first 26 weeks of unemployment benefits, or slightly over six months) since the economic crisis began in 2007.
Minimum Employment or Retention Period, In addition to belonging to one of the 8 groups outlined above, all new adult employees must work a minimum of 120 hours for the employer to qualify to claim the WOTC.
The following individuals or groups of individuals do not qualify for the WOTC, even if they meet the other eligibility criteria:
- Employer’s relatives and dependents;
- Majority owners of the employer; and
- Former employees.
Calculate your WOTC Savings
On average 15% of your new hires may be qualified for up to $2,400 worth of tax savings under the WOTC program guidelines. This varies by region and category.
ABIS has been working with employers for over 17 years to save money by taking advantage of the ABIS Work Opportunity Tax Credit Program.
Based on ABIS’ experience 15% of the workforce is eligible for the employment tax credits. Why aren’t you taking advantage? Call ABIS today at (866) 668-2974.
Try our WOTC Calculator
FAQ About the Work Opportunity Tax Credits
- What is “WOTC”?
- How long is this government program good for?
- What is a Conditional Certification from the State Workforce Agency?
- How many people qualify?
- Who does not qualify?
- What is the amount of the credit available through WOTC?
- What is the minimum length of employment to claim credits?
- What is the 28 day rule?
- I hired a Veteran 4 months ago, can I go retro to claim the tax credit?
- If I had a new hire who would of qualified and it is after the 28 days, can I release them and re-hire to meet the 28 day rule?
- Does an employee have to live in & work to qualify for the empowerment zone tax credit?
- What are the Empowerment Zone Employment Tax Credit regulations under General Business Credits?
- For the Empowerment Zone Employment Tax Credit are there any thresholds?
- What is a Rural Renewal Community ”RRC”?
- How do we know if the Employee is in an Empowerment Zone?
- How do I claim the WOTC Tax Credit?
- For which tax years can the credit be applied?
- Can I go back and amend our returns?
- Can I carry forward tax credits not used?
- How do I apply?
- What does ABIS do?
- Why use ABIS?
- How much is ABIS ’s service?
- When do we have to pay?
- Who do I call to get more information?
What is “WOTC”?
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive that Congress provides to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The main objective of this program is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are compensated by being able to reduce their federal income tax liability. WOTC joins other workforce programs that help incentivize workplace diversity and facilitate access to good jobs for American workers.
How many people qualify?
Based on our 15 years of experience, 10-20% of new hires may be qualified if they are included in the target groups.
What is the amount of the credit available through WOTC?
The amount of the tax credit varies by target group. The tax credit for target groups A, B, C, D, E, G, and H is 40 percent of qualified first year wages up to $6,000 if the individual is retained for at least 400 hours. If the individual is retained less than 400 hours but at least 120 hours a 25 percent tax credit is available on qualified first year wages up to $6,000. The tax credit for target group I, long-term family assistance recipient, is 40 percent of first year qualified wages up to $10,000 and 50 percent of second year qualified wages up to $10,000. The individual must be retained at least 180 days or 400 hours. In certain circumstances you may be able to claim either the 40 percent of $6,000 tax credit or the 40 percent of $10,000 tax credit.
Veterans with a service-connected disability unemployed for at least 6 months with the qualified wages cap increased to $24,000 and the maximum tax credit increased to $9,600.
What is the minimum length of employment to claim credits?
The WOTC amount an employer claims depends on the number of hours the employee works. All new employees must work a minimum of 120 or 400 hours. The credit is 25% of qualified first-year wages (up to $6,000) for those employed at least 120 hours but fewer than 400 hours, and 40% for those employed 400 hours or more.
If I had a new hire who would have qualified and it is after the 28 days, can I release them and re-hire to meet the 28 day rule?
Good try, however the WOTC program is designed to provide Employers an incentive for hiring new employees. So re-hires do not qualify for tax incentives.
Empowerment Zones under Work Opportunity Tax Credit (“WOTC”) guidelines
Does an employee have to live in & work to qualify for the empowerment zone tax credit?
The new employee only has to live in the empowerment zone; however the new employee living in the Empowerment Zone must be between the ages for 18 – 39.
What are the Empowerment Zone Employment Tax Credit regulations under General Business Credits?
For tax years that include December 31, 2012, the credit is 20% of the employer’s qualified wages (up to $15,000) paid or incurred during calendar year 2012 on behalf of qualified empowerment zone employees.
A qualified empowerment zone employee is any employee (full-time or part-time) of the employer who:
– Performs substantially all of the services for that employer within an empowerment zone in the employer’s trade or business and
– Has his or her principal residence within that empowerment zone while performing those services (employees who work in the Washington, DC empowerment zone.
What is a Rural Renewal Community ”RRC”?
A Rural Renewal County is a county outside a metropolitan statistical area that during the five-year periods 1990 to 1994 and 1995 to 1999 had a net population loss. ABIS can provide a list that you may benefit from.
How do I claim the WOTC Tax Credit?
For taxable employers, the WOTC may be claimed for hiring targeted group members, including qualified veterans, who begin work before Jan.1, 2014.
After the required certification is secured, taxable employers claim the tax credit as a general business credit against their income tax. The process for taxable employers claiming the WOTC remains the same.
For additional information, see:
• Form 5884 (with instructions) (PDF),
• Form 3800 (PDF),
• Instructions for Form 3800 (PDF), and
• Your business’s related income tax return and instructions (i.e., Forms 1040, 1041, 1120, etc.)
Qualified tax-exempt organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), may claim the credit for qualified veterans who begin work on or after Nov. 22, 2011, and before Jan.1, 2014. Tax-exempt employers may not claim the WOTC for other targeted group members.
After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans (PDF).
File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately.
For which tax years can the credit be applied?
Employers may claim the Work Opportunity Tax Credit for a total of two years. Employers who do not take the full credit amount because of the tax liability limitation may carry back one year or forward 20 years. Employers claim the tax credit for the year they “realize” the credit i.e. employee hired in 2012, received voucher in 2014, tracked hours and wages for eligibility for full credit in 2014.
Can I go back and amend our returns?
Yes, the IRS will allow a return amending a timely-filed return. Amended returns generally must be filed by the later of 3 years after the filing date of the original return or 2 years after the tax is paid.
Example – The date is 3/15/2013 & we are working on 2012. But ABIS was able to go back and acquire a significant amount ($100,000.00) of WOTC credits accumulated in 2009 for use on our 2010 return (i.e. Refund).
Can I carry forward tax credits not used?
Yes, WOTC tax credits rules are the same as general business credits. You can carry forward unused tax credits for up to twenty (20) years & back one (1) year.
How do I apply?
Your employees fill out the IRS forms 850 and 9061 as part of their new hire paperwork. If using ABIS ’s WOTC services, you can use our online portal, or mail the forms to us for processing, verification and certification tracking within 28 days of the employees start date.
What does ABIS do?
At ABIS , we automate your application, certification and tracking of the Work Opportunity Tax Credit. We only get paid after we have received the government agency certification and verified that your employees qualify for tax credits.
How much is ABIS’s service?
ABIS charges a percentage of the actual tax credit value, so we don’t charge you unless we save you money. One of my favorite quotes to a CFO & Owner “We (ABIS) are the only invoice you are happy to see, because it means we are saving you money.”