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Employers can get a tax credit by hiring underprivileged workers

| May 31, 2018 | Business Employment Tax |

If you’re an employer, you’re probably always looking for ways to cut corners and increase your bottom line. It might surprise you to learn that the Internal Revenue Service (IRS) offers a way to help you out. The IRS is creating an added tax incentive for you to hire candidates in disadvantaged circumstances—and it can end up saving you a lot of money.

Employers can receive a substantial tax credit—worth up to 40 percent of a new hire’s first-year wages—through the Work Opportunity Tax Credit (WOTC). To take advantage of this credit, employers must hire candidates who fall under any of the following categories:

  • Ex-felons
  • Disabled veterans and other unemployed veterans
  • Long-term, out-of-work individuals (unemployed for at least 27 weeks) who receive government unemployment benefits
  • Recipients of public assistance—e.g., food stamps, Supplemental Security Income or family assistance programs
  • Residents of designated Empowerment Zones or Rural Renewal Counties
  • Referrals from vocational rehabilitation

How to apply

To claim the credit, employers must complete IRS Form 8850 along with the Department of Labor ETA Form 9061 or 9062, as necessary, and submit them to your state’s workforce agency within 28 days of a new hire’s first day of work. Employers can contact the WOTC coordinator in their state for details and state-specific procedures.

Many businesses are experiencing a tight market. Such conditions tend to disproportionately hurt certain disadvantaged subsets of the population. The WOTC provides a way to motivate employers to bring vulnerable groups into the workforce. The tax credit can have positive impacts on both business and the community.

We insist that your taxpayer rights are protected and your options are known.

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