JazzHR is proud to partner with WOTC.com to help customers easily create, digitize, and send documentation to apply for the Work Opportunity Tax Credit (WOTC). By utilizing the JazzHR and WOTC.com integration, it will save mutual customers valuable time, eliminate unnecessary paperwork, and potentially put money into the pockets of eligible participants.
Let’s break it down. What is WOTC?
The WOTC is a federal income tax credit that encourages businesses to hire from certain categories of workers who face significant barriers to employment. The allowable credit amount is based on a portion of wages paid to an eligible worker during the first year of employment, or in some cases, during the first two years. Through geographic incentive credits, the federal government has also designated certain economically depressed areas as tax advantage areas, aka Empowerment Zones. If your business is located in one of these areas and you employ individuals living in the same area, you can earn credit against your federal tax liability.
Who fits into a WOTC Targeted Group?
Employers can hire eligible employees from the following target groups for WOTC:
- Qualified Tanf Recipients
- Qualified Veterans
- Designated Community Residents
- Vocational Rehab Referral
- Summer Youth Employees
- Snap Recipients
- SSI Recipients
- Long Term Family Assistance Recipients
- Long Term Unemployment Recipients
How does this credit get calculated on average?
In most cases, the credit equals 40% of eligible wages paid to an employee during the first year of employment, up to a maximum of $6,000 of wages. That translates into a maximum credit of $2,400 per employee. However, there are several exceptions to this general rule.
What is the WOTC Process?
With the JazzHR and WOTC.com integration customers can accelerate the otherwise tedious process by connecting your accounts and digitize the entire application, submission, and review process. Here’s a brief outline of what these stages look like:
- Each new hire completes an IRS 8850 form, online or paper version. WOTC forms are available in English, Spanish, and Russian versions.
- Forms are submitted to WOTC.com automatically through your JazzHR account.
- WOTC.com specialists submit these forms to the govt. agency with backup documentation to prove eligibility.
- WOTC Certifications are received for qualified WOTC applicants.
- WOTC Tax Credits are calculated based on employee’s payroll information.
- WOTC Tax Credits are sent to CPA for filing.
Rules and Restrictions
State Agencies require employers, or service providers like WOTC.com, to submit WOTC applications to them within 28 days of the employee’s start date. This is to ensure timely processing of qualified applicants due to the large volume of applications that the states receive. Be sure to check-in with your tax credit consultant to ensure restrictions like minimum hours of work, rehired workers, and deduction of wages reported don’t affect your eligible into the WOTC program.
Our Advice to Employers
To leverage this enhancement in your current hiring line-up, we suggest including the WOTC paperwork as part of your standard onboarding process with all new hires.
In addition to an I-9, W-4 and other employment agreements, include the 8850 and 9061 forms. To prevent any potential discrimination, include forms for ALL employees, not just the employee you think will qualify. According to the area you’re in, additional forms must be submitted to the state. The paperwork can become a little overwhelming, so it’s important to consult your tax credit consultant for assistance.
Getting Started with JazzHR and WOTC.com
Simply integrate your JazzHR account with WOTC.com to fully streamline this process by centralizing the collection and submission of new-hire information. For detailed instructions, please refer to the JazzHR knowledge base article or schedule a live walkthrough of this new integration.