With the impending tax reform expected in the near future, it’s important to take full advantage of the current tax credits that are available for private-sector businesses. One tax credit that provides a substantial benefit to construction business owners is the Work Opportunity Tax Credit (WOTC).
The WOTC is a federal tax credit offered to encourage businesses to hire individuals from targeted groups. The credit ranges from $2,400 to $9,600 per employee depending on the group the employee belongs to, and there is no limit to the number of credits a company can apply for.
The individuals in the targeted groups have often faced obstacles to finding employment. The WOTC is designed to help put these individuals to work, while also benefiting the employer. Without knowing this credit exists, many contractors are already hiring workers that qualify for the credit.
Individuals that are eligible include:
Click here for a chart on the certification criteria for each of the targeted groups.
The tax credits vary depending on which targeted group the employee belongs to, the wages paid and the number of hours worked during the first year, but employers can expect to earn a credit equal to 25- 40% of a new employee’s first-year wages, up to the maximum allowed. See examples of how much tax credit a construction business owner can earn below:
Applying for the WOTC is a simple process that involves both the employee and the employer. The important thing to remember is that the application must be submitted within 28 calendar days of the employee’s start date.
If you need assistance in applying for the Work Opportunity Tax Credit or have specific quesitons, contact Monique Blystad at firstname.lastname@example.org or 225.209.9253.