RSSM Digital TempNet Edition December 2019 - Page 6

How the WOTC Works The WOTC awards a company up to $9,600 in tax credits when it hires an employee from one of 14 target groups. The exact amount depends upon the individual employee’s target group, a percentage of wag- es, and the hours worked – with a mandated minimum of 120 hours in the first year of employment. The target categories include veterans, SNAP (food stamp) recipients, and the long-term unemployed (see Figure 1). In addition to offsetting the em- ployer’s income tax liability, the WOTC may jointly counteract the company’s Alternative Minimum Tax (AMT). The IRS also allows businesses to carry forward unused credits for up to 20 years and carry them back for one year. Furthermore, some states offer tax incentives that “piggyback” the WOTC - meaning the incentives use overlapping qualifying criteria to offset state income tax liability as well. Since they apply parameters relative to the WOTC, an organiza- tion can generate credits for both the federal and state programs without any additional effort. The WOTC at Work for You With the potential to recover a portion of wage expenses through the WOTC, employers can feel more confident about hiring the necessary amount of staff at a competitive rate. An attractive wage, with sufficient staff, translates to less pressure on employees, less overtime, happier employees - and ultimately coalesces into lower churn rates. Here’s how Corporate Tax Incentives helped three staffing agencies take full advantage of the WOTC: ANNUAL HIRES 4,538 12,136 26,899 ANNUAL BENEFIT AVERAGE CREDIT/HIRE $662,551 $146 $1,832,536 $151 $4,088,648 $152 And then we have the 14 various target groups. These can unveil a workforce teeming with previously untapped potential. The individuals classified within these categories often face employment barriers. But tapping into this pool awards employers with awareness of a group of employees they may have overlooked. Veterans, for instance, often find difficulty securing employment, but many can offer skills and expertise that were acquired in the military to help close the talent gaps, without the need for training. There’s never one fix that fits all, but the WOTC holds the potential to ease some of the staffing industry’s significant aches and pains. With every target group hire, a struggling citizen finds a job, and the employer recovers tax dollars that can help fund competitive pay rates or be reinvested into other areas. The WOTC is a multi-purpose remedy for staffing agencies and em- ployers today. 1. Watch the Skills Gap, Adecco, Jan 2019 2. Why Are Workers Quitting Their Jobs in Record Numbers?, SHRM Online, Dec 2018 ABOUT THE AUTHORS Joseph Gallelli, MBA is President of Total Staffing Solutions (TSS). Joseph works with key partners to help identify recruiting and retention gaps, going beyond pay and benefits to decrease turnover rates and improve production output for valued staffing clients. Stephanie Banuelos is Director of Credits & Incen- tives for Corporate Tax Incentives (CTI). Stephanie has extensive experience serving companies of all sizes and industries to ensure that lucrative tax ben- efits are identified and maximized for client value. Figure 1. Target Groups of Employees Who Qualify for the WOTC 6 WWW.RSSM.BIZ | WWW.RSSM.BIZ