Employers that didn’t screen their new hires between January 1, 2015, and August 31, 2016, for the renewed Work Opportunity Tax Credit (WOTC) are in luck. The IRS issued new guidance June 17 allowing taxpayers to retroactively screen these new hires for qualifying employees, which means employers have one more chance to apply for the credit. Those who wish to take advantage of this opportunity will need to submit forms showing they qualified by September 29, 2016.
About the Credit
The WOTC—a federal credit distributed at the state level—is designed to encourage businesses to hire individuals facing barriers to employment, such as veterans, ex-felons, and those receiving government assistance. New hires employed on or after January 1, 2016, may also qualify under a new target group for the long-term unemployed. Depending on which target group the individual qualifies under, the maximum credit per new hire can range from $2,400 to $9,600. The allowable credit is based on the number of hours worked and the wages earned during the period of employment.
Submit Forms by September 29
In general, to be eligible to claim the credit, employers must apply within 28 days of a new hire’s start date and receive a certification from a state workforce agency. However, due to the sunset of the program at the end of 2014 and subsequent retroactive extension through the end of 2019, the IRS is allowing employers to go back and apply for the WOTC by screening individuals hired between January 1, 2015, and August 31, 2016.
The qualified forms must be submitted no later than September 29, 2016. As a reminder, employers can’t claim the WOTC until a certification is issued by a state workforce agency confirming the employee is a member of a target group.
We Can Help
Our fully automated screening tool, MaxCredits®, can help you meet the September 29 deadline. To learn more about MaxCredits and take advantage of this tax-saving opportunity, contact your Moss Adams professional or reach out to:
National Leader, Credits & Incentives
Partner, State & Local Tax
(503) 478-2339 | email@example.com
Manager, Credits & Incentives
(503) 478-2309 | firstname.lastname@example.org