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How Does the Work Opportunity Tax Credit Work?

The Work Opportunity Tax Credit known as #WOTC is a federal tax credit available to employers who hire individuals from disadvantaged groups of workers. Including WOTC Screening with iRecruit can save an employer significant amounts of money.

How Does the Work Opportunity Tax Credit Work?

WOTC starts with a screening process to determine if any new hires are a member of one of the Ten WOTC Target Groups. Screening can be done on paper using two forms (IRS Form 8850 Pre-Screening Notice and Certification Request for the Work Opportunity Credit, and the Department Of Labor ETA Form 9061 Individual Characteristics Form (ICF) Work Opportunity Tax Credit ). Phone screening using a call center, or done online, using a secure online form. (What is WOTC Screening?)

Completed screening forms are reviewed for eligibility, and submitted to a State Workforce Agency who will issue a final determination on whether or not the new hire is eligible. If they are eligible, they will issue a certification, that will need to be kept on file for at least five years.

Calculating The Value of Your Tax Credit

Once you receive a certification from the State Workforce Agency, you will calculate its value, which can vary depending on the target group, and the hours worked. The employee must work at least 120 hours for you to receive a partial tax credit.

WOTC Tax Credit Values

For example, a new hire who had been unemployed for over six months, and then worked for you for 3 weeks, 120 hours total, you could receive a tax credit equal to 25% of the first $6,000 in wages. If they worked 120 hours for $15, they would have received $1,800, and you could receive a $450 tax credit.

If the same employee worked at least 400 hours, they would reach $6,000 in wages. and you could receive a $2,400 tax credit.

Tax Credits vary by target group, as shown above.

How iRecruit Can Help!

WOTC Screening can be included in iRecruit, as part of the application process, or in iConnect, as part of your new hire (online) paperwork. iRecruit recently updated its WOTC integration to make this easier for our customers.

CMS, the publisher of iRecruit, has been providing WOTC screening services for over 24 years and are experts in this field.

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