Withum The Work Opportunity Tax Credit could benefit you

Hire a New Employee — GET FREE MONEY

By JONATHAN WEINBERG, PRINCIPAL, WITHUM

The Federal Work Opportunity Tax Credit (WOTC) provides tax incentives for hiring individuals who traditionally face barriers to employment. Unlike many state incentives, WOTC is available to restaurant and hospitality businesses. Furthermore, WOTC does not require employers to increase their overall headcount — merely replacing a departing employee with a WOTC-eligible employee is eligible — so the “churn” counts for generating tax credits. Due to COVID-19, the number of Americans who are WOTC eligible has increased substantially. While WOTC is a federal tax credit, the employee certification process is managed by state labor departments. New hires must be certified as WOTC eligible by state labor departments within 28 days of the employee’s start date.

The maximum credit ranges from $2,400 to $9,600 per eligible employee. The amount of credit an employer receives is based on the eligible employee’s hours worked and payroll. The credit for eligible employees working more than 120 hours and less than 400 hours is generally 25% of qualified wages. The credit increases to 40% of qualified wages for eligible employees working more than 400 hours. The maximum credit for each new hire depends on the new hire’s WOTC qualification; e.g., the maximum benefit for a qualified veteran is higher than the maximum credit for an ex-felon. While the credit is capped per capita, the total credit available to an employer is unlimited.

WOTC requires new hires to fill out a questionnaire and provide documentation substantiating that they are eligible to generate WOTC benefits. The questionnaire and supporting documents form the basis of the application for certification filed with the respective state labor department.

Employers are hiring WOTC eligible employees every day. Employers who fail to take advantage of the incentive are quite simply leaving money on the table. Furthermore, by claiming WOTC benefits, employers can monetize their human resource and onboarding functions.

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping clients in the hospitality industry be more profitable, efficient and productive in the modern business landscape.

WOTC eligible employees include:

» Qualified Temporary Assistance for Needy Families (TANF) program recipients. » Qualified Veterans. » Ex-Felons. » Designated community residents. » Vocational rehabilitation referrals. » Summer youth employees. » Supplemental Nutrition Assistance

Program (SNAP) recipients. » Supplemental Security Income (SSI) recipients. » Long-term Family

Assistance recipients. » Qualified Long-term

Unemployment recipients.

For more information, visit www.withum.com.