Your home care agency is hiring new employees all the time. Compiling hours and wages for your payroll takes time and dedication. Your employees depend on you, and their checks. However, there are nuances that go along with preparing payroll and taxes that can benefit your organization. While you don’t have to be a CPA or tax specialist to take advantage of certain credits, you do need to know more about them in order to utilize them to your agency’s advantage.
The Work Opportunity Tax Credit, or WOTC, is one opportunity you might not be using as effectively as possible at your agency. Here’s what you need to know.
What is the WOTC?
The Work Opportunity Tax Credit is a federal tax credit available to employers that hire certain individuals within “targeted groups”. These targeted groups include individuals who have consistently faced barriers to employment.
What are the targeted groups?
You can learn more about the specific targeted groups on the IRS website, but a few targeted groups include:
- Qualified Veterans
- Vocational Rehabilitation Referrals
- Summer Youth Employees
- Designated Community Residents (Empowerment Zone Residents)
- SSI, TAN-F, or SNAP Recipients
- Unemployed Individuals
How much is the tax credit?
WOTC tax credits to employers vary based on hours that the employees in the targeted groups work. However, the range for WOTC tax credits per employee begins at $2,400 and goes to $9,600. There is currently not a limit on credits an employer can receive for qualifying hires.
How does WOTC affect my agency?
You can benefit significantly by taking advantage of WOTC, especially since you are already hiring caregivers. Estimates from top tax agencies suggest that nearly 40% of caregivers are a part of WOTC’s targeted groups. Not only are you gaining excellent employees as you hire caregivers that are a part of a target group, but you will also receive valuable tax credits.
Does WOTC change my recruitment efforts?
You hire caregivers and other staff members based on their experience, passion, and dedication to serving seniors. This will not change as you look to use the WOTC program. However, you will need to have all applicants fill out a few additional forms during the interview process. Then, if the staff member is hired, you have 28 days to submit those forms to your state.
Be sure to include the IRS form 8850 in your agency’s new staff paperwork so that everyone completes it before they begin work.
Other Information You Need to Know
There is no limit to tax credits through the WOTC. That means you can benefit from a robust roster of staff members. Home care agencies already should have a big pool of part-time and PRN employees, as it makes scheduling a bit easier and allows for you to confidently take on new clients without scrambling to find the staff that can care for them. Just be sure your part-time and PRN employees are working shifts throughout the month in order to capitalize your WOTC potential.
You can also create meaningful and mutually beneficial partnerships with local organizations that support employment for targeted groups. Can you connect with your local assistance office to set up a job referral program, or can you take the time to find a way to create opportunities for individuals with developmental disabilities in partnership with a Vocational Rehabilitation program? While you should focus on developing these partnerships in order to give excellent client care while supporting your employees throughout the community, you can also end up benefitting via WOTC payments.
Finally, if you don’t already work with a tax professional who is experienced with WOTC regulations, now is the time to begin investing in that service. They can support you to make sure you are submitting paperwork on time and receiving the applicable credits.
The WOTC program is an excellent way to provide meaningful employment opportunities to individuals throughout your community that benefits your agency in multiple ways. Take the steps now to make sure you are taking advantage of the program.