Frequently Asked Questions
Get the answers to common questions about hiring-based tax credits.
What is the WOTC program?
The Work Opportunity Tax Credit is a tax incentive program sponsored by the federal government. It is designed to improve the employment opportunities for certain people who are disadvantaged by allowing employers who hire them to receive tax credits.
What kinds of hires are eligible for WOTC?
Eligible hires include people receiving food stamps, people with a military background, and the long-term unemployed. There are 13 total groups within the WOTC program.
Can my business earn WOTC tax credits?
If you are a for-profit business, and you hire eligible people, then yes you can earn tax credits!
How do I figure out who is qualified, and how many credits I’ve earned?
There is a certification process that qualifies applicants, and a compliance process involved in determining the amount of credit accumulated for a specific hire. HireCredit handles all the screening, compliance paperwork, and credit calculations for you. Contact us to learn more.
If I’m actively trying to hire people who receive welfare, and are eligible for WOTC, isn’t that discrimination?
No, it is allowed. The entire purpose of the WOTC program is to incentivize businesses to hire people in those circumstances. As an employer, you are protected against any discrimination claims when following the WOTC certification process properly.
What if we don’t have a tax liability due to operating losses?
The WOTC credit can be carried back one year, or forward for 20 years. So even if you don’t have a tax liability this year, it is likely you’ll be able to use the credit in the future.
Can we just handle all the WOTC processing ourselves?
While some companies do handle tax credit processing internally, most recognize that a third party that specializes in tax credits offers better performance and far less operational burden on their business, resulting in a greater net benefit from the program. Processing tax credits internally requires you to divert time and resources away from your core business. Additionally, an independent third party is more likely to get honest responses from applicants, further optimizing tax credit utilization.