WOTC stands for Work Opportunity Tax Credit. WOTC is a federal tax credit rewarding restaurants when they hire workers affected by various economic challenges prior to hire. The best news is, your restaurants already hire eligible employees. You just need the right help to identify and document their qualifications.
Your WOTC tax credit equals a percentage of the wages you pay to certified qualifying employees – up to $9,000 in federal tax credit per person. Qualification rates vary by industry, depending on the characteristics of the workforce. A company hiring only 100 employees annually can realistically generate $35,000 or more per year in tax credit.
The American Recovery and Reinvestment Tax Act of 2009 expanded the WOTC Program to include two new eligibility categories -- "Disconnected Youth" and "Unemployed Veterans." As a result, the WOTC Program is more valuable now to restaurant operators than ever before.
With these additions, the WOTC Program now includes 13 qualification categories, also known as “targeted groups.”
1. Hurricane Katrina Victims
2. Short-term Recipients of TANF (public assistance)
3. Veterans Receiving Food Stamps (SNAP)
4. Disabled Veterans
5. Certain Ex-felons
6. Designated Community Residents
7. Referrals from Certain Vocational Rehab Programs
8. Summer Youth Employees (who live in a Designated Community)
9. Food Stamp (SNAP) Recipients
10. Recipients of Supplemental Security Income (SSI)
11. Long-term Recipients of TANF (public assistance)
12. Certain Unemployed Veterans
13. Disconnected Youth
While the technical details involved are admittedly complicated, you can rely on EF Cost Recovery to identify and document your workforce's eligibility for WOTC and other state and federal tax credit programs.