Hiring and Location Incentives
Ayming can provide consulting services for both the Work Opportunity Tax Credit (WOTC) and State and Local Tax (SALT).
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from eligible target groups with significant barriers to employment. Each year, employers claim over $1 billion in tax credits under the WOTC program. The success and growth of this income tax credit for business is beneficial for all who participate, while increasing America’s economic growth and productivity.
How can the WOTC help my business?
- WOTC reduces an employer’s cost of doing business
- WOTC can reduce an employer’s federal income tax liability by as much as $9,600 per employee hired.
- There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit.
- Certain tax-exempt organizations can take advantage of WOTC by hiring eligible veterans and receiving a credit against the employer’s share of Social Security taxes.
The tax credits employers can claim depend upon the target group of the individual hired, the wages paid to that individual in the first year of employment, and the number of hours that individual worked. There is also a maximum tax credit that can be earned.
Employers can hire eligible employees from the following target groups for WOTC:
- Veterans (including disabled veterans)
- Temporary Assistance to Needy Families (TANF) Recipients
- Supplemental Nutritional Assistance Program (SNAP) (Food Stamps) Recipient
- Designated Community Residents (living in Empowerment Zones (EZ) or Renewal Counties(RC))
- Vocational Rehabilitation Referred Individuals
- Supplemental Security Income Recipients (SSI)
- Long term Family Assistance Recipients (LTFAR)
- Summer Youth Employees
How much is the tax credit?
Employers can earn a tax credit of between $1,200 and $9,600 per employee, depending on the target group of the new employee and the number of hours worked in the first year. Employees must work at least 120 hours in the first year of employment to receive the tax credit.
How are the tax credits Calculated?
Employers generally can earn a tax credit equal to 25% or 40% of a new employee's first-year wages, up to the maximum for the target group to which the employee belongs. Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours.
What are the maximum tax credit Amounts?
The maximum tax credit amounts depend on the new employee's target group and the number of hours worked during the first year of employment.
State and Local Tax (SALT)
If you're hiring new employees, there are many different state, local, municipal, and industry-specific programs available to your business. Ayming’s experts help you understand the programs and provide you with a preliminary needs analysis to identify all applicable SALT programs for your organization.