Texas employers are leaving millions in federal tax credits unclaimed and the opportunity for tax savings is now greater for those who choose to participate in the Work Opportunity Tax Credit (WOTC) program. Employers who hire unemployed veterans or eligible 16- to 24-year-olds are now entitled to receive up to $2,400 in tax savings for each member of those groups added to their payrolls in 2009 and 2010. As part of the American Recovery and Reinvestment Act of 2009, these groups are now included with the existing 10 targeted populations eligible for WOTC.
Administered by the U.S. Department of Labor and the Texas Workforce Commission (TWC), WOTC is a federal income tax benefit for private employers who hire from certain groups. Tax credits range from $1,200 to $9,000. WOTC reduces a business’ tax liability, serving as an incentive to select job candidates who face barriers in their efforts to find employment.
“We want Texas employers to earn valuable tax credits while benefitting from the skills of these often untapped groups of qualified workers,” said TWC Chairman Tom Pauken. “It’s particularly encouraging to me that unemployed veterans now are included in this program.”
TWC certifies which newly- hired employees make an employer eligible for the tax credit based on applications received from the new employer. Although TWC was able to identify more than $200 million in tax credits for Texas employers in FY 2009, there were many more credits available that went unclaimed because applications were not submitted. WOTC offers employers a way to address workforce shortages while reducing hiring costs and gives job seekers a way to overcome some employment barriers.
For the newly added groups to qualify their employers for WOTC, new hires who are unemployed veterans must have been receiving unemployment benefits for at least four weeks and youth must not have been regularly employed or regularly attending school for six months prior to being hired.
“Our company saved $114,000 on our federal income taxes last year by hiring 85 qualifying employees to work in our restaurants,” said Joseph Hicks, Certified Public Accountant for Wright Foods, which owns several restaurant franchises in the McAllen area.
Within each employee group, specific eligibility requirements apply. All forms and WOTC information are available online at: www.twc.state.tx.us/svcs/wotc/wotc.html, or by calling the TWC WOTC unit at 1-800-695-6879.
(Source: Texas Business Today, Winter Issue)