Transition Relief to Retroactively Claim Work Opportunity Tax Credits

Work Opportunity Tax Credits (“WOTCs”) are federal tax credits that are available to your business if you hire individuals from certain targeted groups, including veterans, food stamp recipients, recipients of Temporary Assistance for Needy Families, and individuals who have been unemployed for more than 26 weeks. The credits you may receive range from $1,200 to $9,600 per qualified hire, depending on the targeted group. Certain state tax credits may also apply.

WOTCs can be used to offset your regular or alternative minimum tax. However, before claiming a credit, you must generally screen employees on or before the date of hire, and submit a certification request with a State Workforce Agency (SWA) within 28 days from the employee’s hire date. Because WOTCs had expired on December 31, 2014, and were not reinstated until December 18, 2015, these requirements could not have been completed during most of 2015.

Recently released IRS Notice 2016-22 provides a unique opportunity for companies to retroactively claim credit for eligible employees hired during 2015. The transition relief provided in this notice allows employers until September 28, 2016 (updated as of June 20, 2016), to apply for certification regarding potentially qualified employees hired between January 1, 2015, and May 31, 2016.

Who’s eligible, how to file, and the other details you need to know are explained in this short video.

 

Cherry Bekaert’s Credits & Incentives team is available to qualify your business for the credit, estimate potential benefits, and discuss implementation of the WOTC process. If you would like further information on our WOTC tax services, please contact Anne Yancey at 404.733.3329 or ayancey@cbh.com, or a member of your client service team.