Seasonal summer workers and a valuable tax credit

Summer is around the corner, and for some industries, this signals the start of hiring for a busy season ahead. However, given the ongoing labor shortages, finding temporary employees could prove to be challenging.

This is why companies should be looking into an important employment tax credit, the Work Opportunity Tax Credit, which can help to offset the labor shortage issues while also helping those who have faced barriers to employment. 

WOTC is a lucrative tax credit and was extended until 2025 in light of COVID-19. It is also one that large companies are well versed in; you better believe some of the big-name corporations are making good use of it (to the tune of millions of dollars), but it's actually available to any employer who hires individuals from certain targeted groups who have consistently faced significant barriers to employment. People like unemployed or disabled veterans, SNAP recipients, reentering ex-felons, qualified long-term unemployment recipients and many more are eligible for WOTC. 

How WOTC works 

There are so many people looking for jobs who have faced barriers to employment in the past. And the longer they're on your payroll, the higher your potential WOTC credit is. But this still includes a summertime job: 

An employee is eligible for WOTC once they've worked 120 hours — that's a mere three weeks if a person is working 40 hours per week — at a rate of 25% of their wages for a tax credit, and once they've worked 400 hours, that number jumps to 40%. You can apply for WOTC for up to 20% of your new hires, but you have to file for it when you hire them; it's important to remember that it can't be retroactive.

Applying is a relatively straightforward process. Once a company determines if a new employee qualifies, two important deadlines have to be met within a month of a new employee's first day of work in order to claim the tax credit: The IRS Form 8850 needs to be completed before or on the day the job offer is made and either the ETA Form 9061 or ETA Form 9062 must be submitted no later than 28 days after the new hire's start date. Working with a tax credit expert, who can manage the process front to back, makes the process a very smooth, manageable one to ensure you're not leaving any money on the table.

WOTC and second chances

For example, Goodfellow Bros., a general contractor that specializes in heavy civil construction, hires 50% of its labor between the months of June and August for its seasonal workforce during their busiest times. By tapping into this time frame, these months tend to produce a 37% higher WOTC eligibility rate than all other months. It also has resulted in the majority of its WOTC credit coming from this time period. Needless to say, the summer months are an incredible time to focus on tapping into the audience of WOTC target groups.

WOTC is a simple way to create more cash flow for your business, and what you do with that is ultimately up to you, but we've seen so many businesses use it for good by reinvesting it in their people — with things like more competitive wages and bonuses for employees. We're not naive enough to label a tax incentive program as altruism, but this program is truly a win-win, giving you the opportunity to help someone potentially get back on their feet.