She did her best not to laugh when she first saw the size of his WOTC...
In business, it is hard to find a piece of lower hanging “metaphorical fruit” than the Work Opportunity Tax Credit. If you need validation for that claim, ask yourself this simple question:
If the United States Treasury was selling dollar bills for twenty cents, how many would you buy?
I rest my case. When it comes to the WOTC program, there is only one thing more befuddling than why every profitable US Company doesn’t take advantage of this program, and that is the vast differential in the dollar amount of tax credits earned by companies in the same industry and hiring from the same labor pool.
This post will not educate you on the pros and cons of different applicant screening methods to identify WOTC pre-qualifiers. It’s not meant to guide you on the decision between processing credits in-house or outsourcing it to a third-party processing specialist. What you will learn from this post is whether or not your WOTC program is producing typical results and tax credits when compared to industry norms. A quick advisory on “industry norms.” The WOTC check-up outlined below is only applicable to companies in the sixteen industries that Corporate Benefits Alliance specializes in; I suspect it is entirely irrelevant for the ones who don’t.
Almost every doctor I have met advises adult men and women to give their body periodic self-examinations to uncover potentially dangerous maladies at the earliest stage possible. When a self-examination reveals any irregularity in the body that may be a precursor to a severe health issue, the next step is obvious—to see a doctor or specialist and have it properly checked out.
Think of this exercise in the same way. Its sole purpose is to look for a warning sign that might indicate the “health” of your WOTC processing program should be looked at more closely. That’s it, nothing more. If you do plan on completing this quick exercise you will be pleased to know it can be done anywhere you choose and at no point in the process will you be asked to cough.
Step one—Locate your WOTC.
It is only logical if you want to examine your WOTC, you must know where to find it. You can easily find your WOTC on IRS form number # 5584. If you participate in the WOTC program, this form will be attached to the last Federal Tax Return you filed. Locate line # 4 on IRS form # 5584—this is your WOTC! Write the number down somewhere. Also, it will be helpful to take note of the year you used the tax return.
Step Two – Calculate how many new employees your company hired during the same tax year.
Given the technology in most workforce management platforms today, this should be an easy number to locate. However, if for any reason, it is not, you can approximate it. To do that, count your current number of employees and subtract that number from the number of W2s you issued last year.
Step Three – Multiply the number of new employees you hired by the numeral 185.
Jot that number down close to the WOTC number you wrote down in Step One.
Step Four - Multiply the number you calculated in Step Three by 0 .75
Don’t worry; we are almost done! The next step is going to reveal how “healthy” your WOTC is and if any further action is needed.
Step Five – Compare the number you wrote down in Step One to the number you calculated in Step Four.
Which number is larger? If the figure you wrote down in Step One is larger than the number you had calculated in Step Four – Congratulations! You can wipe your brow, let out a deep breath, and go back to something much more productive, like working through those unsettling feelings that are still lingering from watching the final episode of Game of Thrones.
However, if step one number is smaller than the amount you calculated in step four, you should pick up the phone and schedule an appointment with a WOTC specialist. While there is no reason to be alarmed at this juncture, there is a clear indication that something may be askew with your WOTC processing program. The good news is that after running a simple battery of more in-depth tests, any WOTC specialist will be able to diagnose the problem and help you get on a path to a complete recovery.