Big news and a big savings opportunity for employers right now:
Not only has WOTC been retroactively reauthorized going back to 1/1/12 through the end of 2013 (as part of the American Taxpayer Relief Act “ATRA”), but also…
As per IRS Notice 2013-14, employer claims for WOTC credit on hires going back to the start of 2012 will be considered timely if filed by April 29, 2013.
You Can Take WOTC Credit For All Eligible 2012-2013 Hires!
Becuase veterans were the single WOTC target group that remained eligible for employer credits throughout the course of 2012 under the VOW to Hire Veterans Act of 2011, there is a distinction between dates of eligibility for retroactive credit based on whether the eligible hire is a qualified Veteran or a member of another WOTC-eligible category.
Specifically, the extended filing date applies as follows:
- For non-veteran WOTC hires, employers may claim the credit for those hired on or after January 1, 2012 and on or before March 31, 2013.
- For WOTC-qualified veterans, employers may claim the credit retroactively for hires made on or after January 1, 2013 and on or before March 31, 2013.
Normally, to qualify for WOTC: 1) the applicant must complete pre-certification Form 8850 on or before date of hire, and 2) employers must submit the completed Form 8850 to the state workforce agency within 28 days from the first day of work, so even for WOTC-qualified veteran hires, this is a substantial extension.
The National WOTC Coordinator has confirmed that the filing extension applies to BOTH the applicant/new hire as well as the employer portions of the Form, so that employers can go back for new hires within the relevant time frame and together with the employee complete a Form 8850 for submission, even if they were not pre-screened at or before hire.
It’s estimated that approximately 10-25% of all new hires are WOTC-eligible, with variation across industries and geographic region. This is credit that is traditionally under-used by employers, but perhaps these unique circumstances will change that.
The employer credit from WOTC is typically 40% of the first $6,000 wages earned by a qualified employee. So, for an employer that hired 50 new employees in each month of 2012, assuming 15% of those hires are WOTC-eligible, that translates to 90 WOTC-eligible hires for the year.
50 hires per month x 12 months= 600
600 x .15 percent WOTC-eligible = 90
90 WOTC-eligible hires – 15 lost to poor paperwork/disqualified = 75
75 employees x .4 WOTC Credit Rate
x $6,000 EE Wages =
$180,000 in retro WOTC savings from 2012
It’s a significant and important potential offset to the elevated employment taxes that employers have been enduring in recent years.
Download the presentation slides and audio from our 30 minute presentation on WOTC in 2013.
Whether or not you have an existing WOTC program in place, learn how you can extract maximum savings from your hiring credits program.
Read about ETS Credits PLUS Hiring Credits Services here.
You may be interested in reading our other posts on WOTC and employer hiring credits here.