WOTC Tax Strategy

Okay, this week we're talking about the Work Opportunity Tax Credit, and this is also known as WOTC. And what this is, is this is a tax credit that employers can get for hiring people from within certain categories. And the categories per the federal government were determined to be groups of people that have sort of a barrier to the workforce, right? So they want to kind of incentivize businesses to in fact hire them and get them into the workforce. And there's about like 9, 10, or 11 groups. It changes, you know, year to year, but this— the groups are You know, some certain ex-felons, certain qualified veterans, people that were on food stamps, things like that. And if a person falls within one of these groups, this is one that has a lot of, a lot of timing parameters and a lot of different paperwork that is involved. So you want to make sure that you're doing this the right way. This one actually starts before an applicant is even hired, right? So you want to, again, you want to make sure that you're following the rules. You understand how they work, the timing, what's involved. And essentially, once the pay— Once the person's pre-screened and they could fall within one of the groups, then you send more paperwork off to what's called a state workforce agency. And then that agency determines if the person is in fact part of one of those groups, they certify them. And then again, depending on the number of hours worked, what they make, those types of things, then the tax credit is calculated off of that. Now remember, a tax credit is much better than a deduction. A tax credit is a dollar-for-dollar negation of a tax bill, right? So if you owe 10 grand and you have $10,000 in tax credits, You owe no tax. It wipes it out. Again, this is one informationally, you know, now you know that this thing exists, but it is very important that you do in fact follow the, you know, crossing T's, dotting the I's. This is one that you want to work with somebody that knows what they're doing. We used to have a company years ago that we processed these as a tax credit consultant. We had like professional sports teams that we were working with, big companies that hire a lot of people. So. We kind of know the ins and outs of this one very well. So if you have any questions about that, please, you know, reach out. We're happy to help you with this. But yeah, this could be— this is a big one because it is, like I said, a tax credit. And this is— these are more powerful than deductions, you know, if you can in fact qualify for them. So if you have any questions, let's talk. Talk soon.