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Employment taxes

How to Effectively Claim the Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a valuable incentive program to potentially reduce your tax liability while making a positive impact in your community. As a small business owner, you have the opportunity to uncover the immense benefits and potential that tax credits can have on your business. In this article, we’ll break down the basics of the WOTC and explain how it can benefit both your business and the individuals you employ.

Determine Employee Eligibility

The first step in claiming the WOTC is to determine whether an employee falls into one of the targeted groups specified by the IRS. These groups include qualified IV-A recipients, qualified veterans, qualified ex-felons, designated community residents, vocational rehabilitation referrals, summer youth employees, SNAP recipients, Supplemental Security Income recipients, long-term family assistance recipients, and qualified long-term unemployment recipients.

Apply for Certification

To certify that an employee qualifies for the WOTC, you need to submit these forms to the state workforce agency (SWA) in your state within 28 calendar days from the employee’s start date.

  1. Have the job applicant complete Form 8850 before or on the day of making a job offer.
  2. Complete the remaining sections of Form 8850 at the time of the job offer.
  3. Fill out the conditional certification Form 9061 (or request Form 9062 if the applicant already has it).
  4. Check to see if any additional forms are required for the applicant’s specific targeted group.
  5. The SWA will provide you with a letter confirming the employee’s eligibility or denial.

Tax Credit Calculation

Once an employee is certified as eligible for the WOTC, you need to determine the qualified wages that can be considered for the tax credit. Qualified wages are the wages on which you paid Federal Unemployment Tax Act (FUTA) tax during the employee’s first year of work. However, wages paid while receiving payment from a federal on-the-job training program or reduced by Social Security Act payments should be excluded.

Additionally, you need to identify the maximum allowable wages for each employee category, which depend on the target group. These limits can be found in the IRS instructions for Form 5884.

Claim the Work Opportunity Tax Credit

  1. Use Form 5884 (or Form 5884-C for tax-exempt organizations that hired qualified veterans) to calculate the allowable credit based on the qualified wages determined in your tax credit calculation.
  2. Enter the maximum allowable wage on Form 5884, Line 1A (for employees working between 120 and 400 hours) or Line 2 (for employees working more than 400 hours).
  3. Transfer the calculated credit to Form 3800, General Business Credit , which will be filed with your business tax returns.
  4. Keep a record of the certification and all supporting documentation for future reference and potential audits.

Successfully claiming the Work Opportunity Tax Credit can result in significant tax savings for your business while fostering employment opportunities for individuals from targeted groups. By following the steps outlined in this guide, you can navigate the process with confidence and maximize the benefits of the WOTC program.

Let Us Help

At Tax Credit Group, we specialize in helping businesses identify and claim various tax credits and incentives. Reach out to our team of experts to streamline the WOTC process and ensure you receive the maximum benefit from this valuable tax credit.

Tips for Streamlining Business Tax Credit Processing

Business owners understand the importance of efficient tax credit processing for their businesses. Not only does it help to save time and resources, but it also reduces the risk of errors that can lead to costly consequences.

Here are some steps that a business can take to streamline their tax credit processing and minimize the risk of errors:

Keep accurate records

It’s crucial to maintain accurate and organized records of all tax credit-related documents, including applications, certifications, and supporting documentation. This helps to ensure that nothing is overlooked or misplaced, which can lead to errors in processing.

Verify eligibility requirements

Before applying for any tax credits, it’s essential to verify the eligibility requirements. This includes confirming that your business meets all the necessary criteria and submitting the required documentation to support your eligibility. Check out the IRS Tax Credits and Deductions page for a comprehensive list of available tax credits and their eligibility requirements.

Double-check calculations

Accuracy is critical when it comes to tax credit processing, so double-checking all calculations and formulas is a must. This helps to ensure that everything is calculated correctly, and there are no errors that could potentially cause problems later in the process.

Use software tools

There are many software tools available to help streamline tax credit processing, including those that can automate data collection, assist with record-keeping, and even calculate tax credits automatically. By utilizing these tools, businesses can significantly reduce the risk of errors and improve efficiency.

Work with a tax credit consultant

At Tax Credit Group, we can help businesses navigate the complex world of tax credits and ensure that they are taking advantage of all the credits available to them. We can also provide guidance on eligibility requirements, documentation, and calculations, reducing the risk of errors and maximizing benefits.

At Tax Credit Group, we’re committed to helping businesses navigate the complex world of tax credits. Call us at (563)583-2115 to optimize your tax credit processing and learn more about how we can help your business maximize its tax credit potential.

The Benefits of Work Opportunity Tax Credits

As a business owner, it’s important to be aware of all the tax incentives that are available to you. One such incentive is the Work Opportunity Tax Credit (WOTC), a federal tax credit for employers that hire individuals from specific groups that have historically faced barriers to employment.

Eligible Employee Groups

Eligible employee groups for WOTC include veterans, individuals receiving public assistance, ex-felons, and several other groups. Hiring from these groups not only promotes diversity and inclusion in the workplace, but it also allows businesses to take advantage of the WOTC tax credit.

Tax Credit Amounts

The tax credit amounts available vary based on the length of time the employee works for the company and the employee’s wages. According to the official IRS website for the WOTC program, businesses can claim up to $9,600 per eligible employee, depending on the employee’s specific target group and the number of hours worked. This can add up to significant savings for businesses, especially those in industries with high turnover or recruitment costs.

Applying for WOTC

One of the benefits of the WOTC program is that it is not limited to certain industries or regions. As stated by the Department of Labor, any for-profit business, tax-exempt organization, or government entity that employs individuals in the United States may be eligible to claim the credit. This means that businesses of all sizes and in all industries can take advantage of the program.

State Specific Credits

In addition to the federal WOTC, many states also offer their own WOTC program, which can provide additional tax savings for businesses.

Tax Credit Group

The Work Opportunity Tax Credit is a valuable incentive for businesses that hire individuals from specific groups that have historically faced barriers to employment. By taking advantage of this tax credit, businesses can not only promote diversity and inclusion in the workplace, but also reduce their tax bill and generate a return on investment. If you want to take advantage of this opportunity and other credits your business may qualify for, don’t hesitate. Contact Tax Credit Group so we can help you navigate the process and maximize your savings.

Lucrative Tax Incentives for Employers

As a tax credit consultant, it is our job to help businesses navigate the complex world of tax incentives and deductions. We specialize in helping employers take advantage of the many lucrative tax incentives available to them. In this article, we will be sharing some of the key incentives that employers should be aware of and how they can take advantage of them.

Supporting the Community

First, let us talk about supporting the community. Many states offer tax incentives for businesses that make charitable donations or sponsor community events. For example, some states offer credit for businesses that sponsor local little league teams or make donations to food banks. By giving back to the community, businesses can feel good about doing their part but also benefit from a reduced tax bill.


Another way for employers to take advantage of tax incentives is by hiring from specific groups. The Work Opportunity Tax Credit (WOTC) program is a great example of a valuable tax incentive for employers. This program provides tax credits to employers who hire individuals from certain targeted groups who have consistently faced significant barriers to employment. By hiring from these groups, employers can reduce their tax bill while also helping to promote diversity and inclusion in the workplace.

Development Opportunities

Offering training and skill development is also a terrific way for employers to take advantage of tax incentives. Many states offer tax credits for businesses that invest in employee training and development programs. By providing opportunities for employees to improve their skills, employers can also improve the productivity and performance of their workforce.

New Jobs

Finally, bringing new jobs to the community is another way for employers to take advantage of tax incentives. Many states offer tax credits for businesses that create new jobs or expand their workforce. By investing in new hiring, businesses can also grow their operations..

Tax Credit Group

There are many lucrative tax incentives available to employers that can help them save money while also supporting the community, promoting diversity, and investing in employee training and development. If you are an employer and want to take advantage of these incentives, it is important to consult with a tax credit consultant. Call us today at (563)583-2115 to ensure that you are maximizing your savings.

Understanding State Tax Incentive Programs

The Importance of Corporate Incentive Programs

It is common for local, state and federal government entities to offer tax incentive programs to recruit businesses to designated enterprise zones (also called empowerment zones) to stimulate growth. Additionally, in many states, employers are provided opportunities to participate in programs that support the economic development within their community in exchange for specific tax credits.

Qualifying activities such as job creation, research development, manufacturing, and other growth endeavors are included in these tax incentive programs to help support the state’s economic objectives. Each state has unique strategies in place to stimulate and diversify their economies.

Businesses can benefit from their state’s tax programs by promoting new capital investments and other desirable economic activities within a company. There are a wide range of employer tax incentive programs available for businesses in 2023. Here are a few specific objectives that states consider when offering their corporate tax incentive programs.

Job Creation

Hiring is something that most companies do often. Job creation and hiring tax credits are widely available. As far as employer tax credits are concerned, the job creation silo is certainly one of the most favorable, as it provides the push needed to grow and diversify a company and strive for revenue building growth.

Enterprise Zoning

Enterprise zone credit programs are incentives designed to help stimulate growth in depressed areas of a state. Areas of underemployment are targeted to help revive these somewhat struggling areas so they can attract more development and opportunity. Many qualifying locations benefit from the added jobs, market growth, and community awareness.


The opportunity for manufacturing credit is often offered with the intention of bringing manufacturing activity to the state. This can significantly increase the number of available jobs and an promotes an atmosphere that inspires other manufacturing opportunities. Bringing in new businesses and increasing operating margins translates to new products, jobs, and industry advancements.

Research & Development

Research and development credit is used to motivate companies to engage in activities related to developing knowledge. This credit provides additional funds to stimulate innovation and development and is typically available to businesses of all sizes.

Work with a Tax Credit Consultant

Companies that analyze credits that exist in their state will benefit by taking steps to qualify for these programs proactively. Here at Tax Credit Group, we help your business by screening your company for employer tax incentives to ensure you get the credits that are owed to you. Call us today at (563)583-2115 to learn which benefits could be available to your company.

The Best and Worst States when it Comes to Taxes

There are a lot of factors to consider when you begin to establish your business and one factor that is often overlooked is the effect state taxes will have on your business’s bottom line. Sometimes businesses forget that in addition to those federal taxes, they also have to pay state taxes and often local city business taxes as well. All of that can make a big dent on a business’s bottom line.

The Tax Foundation, a non-profit that specializes in tax policy took a look at all 50 states and ranked them in five different categories: corporate tax, individual income tax, sales tax, property tax, and unemployment insurance tax. Based on those rankings, it came up for an overall ranking for each state. You can see the full list here, but to make it a little easier, take a look at the top and bottom three on the list.

The Top 3


The state of Wyoming has the lowest corporate and individual income taxes in the United States. Its sales tax (just 4% in 2019) is also in the top 10, which makes it a very agreeable place for businesses to set up shop.


Alaska is top in America when it comes to individual income tax and 25th for corporate tax. The state has no sales tax, but it allows cities to tax purchases up to 7%, which dropped the state down a few pegs in the rankings.

There are downsides to opening a business in Alaska. The cost of living in Alaska is high and the quality of life can be poor considering for part of the year it’s pretty dark outside.

South Dakota

South Dakota has the best corporate tax rate in the country and is tied with Wyoming for the best individual tax rate. But the state’s sales tax rate is 4.5% which is what knocked South Dakota down to third on the list.

Bottom 3

New York

New York’s low ranking has a lot to do with property taxes and the individual state income tax, which are 47th and 48th respectively. The one place the state does excel is how it treats its corporations. According to Nolo, the default corporate tax rate is 6.5%, but emerging technology companies get a 1% break and qualified manufacturers pay no corporate tax at all.

New York includes New York City and that’s another roadblock for businesses. Companies that want to open up in The Big Apple will have to contend with another set of taxes as well. According to Smart Asset, New York City also collects its own individual income tax on top of what the state and federal government collect.


Second to last on the list is California, in large part because of how much it charges in corporate and individual taxes. California is 49th on the list in individual tax, behind only New Jersey, which just so happens to be the lowest ranking state on the Tax Foundation’s list.

There is an upside to California, U.S. News ranks the Golden State as the top spot to start a business because “The state boasts the most venture capital investment and the highest patent creation rate of any state.”

New Jersey

The Garden State falls to the bottom of the list because it has high taxes in almost every category. The state has the highest individual tax in the United States and ranks 47th in corporate tax. There’s also a state sales tax that ranks 45th on the list at 6.625%.

President Signs Disaster Tax Relief Bill


In the last three months, US residents were devastated and are now faced with recovering from the impact of Hurricanes Harvey, Irma, and Maria, with Harvey being one of the most powerful in recent history.

As we all know after such devastation, it is vital to a community to get back to operational as soon as possible and this includes helping businesses get their employees back to work and providing much needed services.  Disaster relief in the aftermath of crippling weather events is as important to businesses as it is to the residents of affected communities.

On September 29, 2017, President Trump signed HR 3823, the Disaster Tax Relief and Airport and Airways Funding Act of 2017, and that bill became law on that same date.  Section 503 of the bill, entitled “Disaster-Related Employment Relief,” addresses the retention tax credit, which applies to wages paid by an eligible employer to an eligible employee during the time when the employee’s workplace was inoperable as a result of a declared disaster.  The retention credit applies to impacted disaster zones resulting from Hurricanes Harvey, Irma, and Maria and also has specific requirements to meet eligibility.

Now to the good stuff!  How does a business qualify? Which employees are eligible? Etc, etc…the fun facts are below…

To paraphrase the cryptic language of the Internal Revenue Code, the employee retention credit for any taxable year is an amount equal to 40 % of the qualified wages for each eligible employee, of the affected employer, for that taxable year, not to exceed $6000 in qualified wages for each eligible employee.

To clarify…an “eligible employer” means any employer,

1) which conducted an active trade or business on August 23, 2017, in the Hurricane Harvey disaster zone, on September 4, 2017, in the Hurricane Irma disaster zone, and on September 16, 2017, in the Hurricane Maria disaster zone and

2) if the business was inoperable on any date between August 23, 2017, and before January 1, 2018, as a result of damage sustained by Hurricane Harvey; dates between September 4, 2017, and before January 1, 2018, as a result of damage sustained by Hurricane Irma; and dates between September 16, 2017, and January 1, 2018, as a result of damage sustained by Hurricane Maria.

The retention credit also requires that the employee is deemed an “eligible employee”…which is defined as an employee whose principal place of employment on August 23, 2017, September 4, 2017, and September 16, 2017, coincides with the designated hurricane disaster zones for Hurricanes Harvey, Irma, and Maria.

In addition, the term “qualified wages” means wages paid or incurred by an eligible employer, with respect to any eligible employee, on any of the specified dates for each of the hurricane disaster zones beginning on the date the business first became inoperable immediately before the hurricane and ending the date that the business was able to resume operations at the designated workplace.  The qualified wages include wages paid whether the employee performs no services, performs services at a different location, or performs services at the principal workplace before operations have resumed.

Here’s the caveat, and there is always a caveat with new legislation.  To be considered for the credit, the employee cannot be treated as an “eligible employee” if the employer is allowed the credit under the Internal Revenue Code of 1986 for the same time period.

If you would like more information and you just LOVE reading new tax legislation you can read the bill in it’s entirety here.

We know know tax credit changes can be difficult to understand. If you would like to know more about how to claim this credit, or whether or not you qualify, feel free to give us a call at 866-844-9529, or reach out to us here.

WOTC Renewal Update


The Work Opportunity Tax Credit (WOTC) program scored a big victory this week. On 7/21/15, the Senate Finance Committee voted 23-3 to pass a two-year extension of this important program. This means that the bill is now ready for a full Senate vote. Although this is only the first step,  the near-unanimous support for WOTC legislation marks a huge step forward in a program which has awaited renewal since December 2014.

WOTC is an employment incentive to reward businesses who hire from several target groups that historically have faced barriers to employment. The tax credit awards businesses up to $2400-9600 for each eligible new hire. Applications must be received within 28 days to state workforce agencies.

We strongly advocate for this program as it has served American companies well. WOTC has helped businesses save thousands annually in tax liability. Moreover, it expands opportunities for job candidates most in need.

The program has passed one gateway and is en route for a Senate vote. We will keep you posted as new developments take place.

Kentucky Employment Tax Incentives


Corporations located in Kentucky may not be aware that they have state tax credits available to them in addition to the federal credits offered from WOTC. Hiring an unemployed resident could qualify you for as much as $100 for each eligible individual.

Businesses can qualify if their new hires are certified by the Office of Employment and Training as unemployed for sixty days prior to being hired into full-time employment. Individuals must also be employed full-time for 180 consecutive days during the tax year the credit is claimed. Full-time employment is defined as working 23 hours weekly or more.

The state of Kentucky considers applicants unemployed if they worked less than 23 hours weekly or 100 hours a month during the sixty days immediately prior to employment, and they must have had an employed status prior to the term of unemployed status.

There are a few exclusions to the program to be mindful of. Credits may not be claimed if the employee received federally funded payments for on-the-job training, is a relative of the employer, if the employer is an estate or trust, is a grantor, beneficiary, or fiduciary.

If your business is located in Kentucky, we can assist with educating and helping you obtain these applications and certificates. Just by making a few minor tweaks in your hiring process, you could claim extra tax savings. Give us a call today to learn more about these credits.

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