SmartLinx Product Manager David Schrader and Michele McFadden, Vice President of Poduct Management and Strategy, discuss the advantages of the Work Opportunity Tax Credit (WOTC) for both employers and employees.
Q:What is the Work Opportunity Tax Credit (WOTC)?
A:The Work Opportunity Tax Credit (known as WOTC) is a federal tax credit, created by the Department of Labor, available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
Q:How much can an employer receive in tax credits?
A:Employers can receive tax credits ranging from $1,200 to $9,600 for each WOTC-eligible hire. Each year, employers claim over $1 billion annually in tax credits due to this program.
Q:What are the target groups WOTC applies to?
A:Target groups can be based on where an employee lives, financial status, military status, etc. Each target group has a specific potential value in terms of tax credits, that increases in relation to how many hours the employee works.
Q:What are the target groups that can qualify for WOTC?
A: The following target groups qualify for WOTC:
- Unemployed veterans (including disabled veterans)
- Temporary Assistance for Needy Families (TANF) recipients
- Food Stamp (SNAP) recipients
- Designated community residents (those living in Empowerment Zones or Rural Renewal Counties)
- Vocational rehabilitation referred individuals
- Supplemental Security Income recipients
- Summer Youth Employees (living in Empowerment Zones)
- Qualified Long-Term Unemployment recipients
Q:How does the SmartLinx Applicant Tracker incorporate WOTC?
A:Our SmartLinx Applicant Tracker is designed to streamline the recruitment process, from job posting through onboarding. Because we understand the value of WOTC to employers, we've embedded WOTC capability right into our product. During the interview stage, Applicant Tracker lets employers choose whether to ask candidates questions identifying them as part of any of the key target groups I mentioned.
Q:What happens if I submit a hire for WOTC who turns out to be ineligible?
A:We don't think an employer should ever have to worry about an employee's eligibility, which is why we have a simple flat fee method. If for whatever reason the employee is determined to be ineligible for the credit, your fee is 100% refunded.”
And, most importantly, the potential credit values of each applicant are visible throughout the applicant tracking process. If you find yourself having to choose between two possible candidates, you may decide to choose the one who is eligible for a credit.
Q:What are the hidden advantages of WOTC?
A:With so much of the conversation about credits, it's easy to lose sight of the greater goal of this program. In a recent conversation with Lori Piracci, HR Director of Oriol Healthcare, she summed it up best:
"WOTC… would really pay for the applicant tracking system but… you're also hiring candidates that you know you're helping their situation… you could be changing their life."
About the Author
David Schrader is a Product Manager at SmartLinx Solutions, responsible for WorkLinx Human Resources and Applicant Tracker. He has 20 years of experience designing, building, and delivering software solutions across numerous industries.