ti Understanding WOTC Tax Credits Customized Tax Credit Webinar for Peopleclick Clients

Transcription

1 Identifying i Your True Tax Credit Potential: ti Understanding WOTC Tax Credits Customized Tax Credit Webinar for Peopleclick Clients

2 Welcome to our Webinar! Kitty Leggieri Director MAXIMUS Tax Credit and Employer Services I Over 25 years of service with MAXIMUS Leading Member of MAXIMUS Tax Credit Administration Program Recipient of MAXIMUS 2008 CEO Excellence Award

3 ABOUT MAXIMUS Founded in 1975 Publicly traded on the NYSE Operates over 280 offices throughout the United States, Australia, Israel, Canada, and the United Kingdom Over 6,000 employees Clients in all fifty states Provider of tax credit services since 1978 Customized tax credit process & procedures

4 A FEW OF OUR CLIENTS Keystone Foods

5 Tax Credit Overview

6 WOTC - WHAT IS IT? The Work Opportunity Tax Credit (WOTC), provides a tax credit for employers who hire and retain certain targeted low-income groups, including vocational rehabilitation referrals, former AFDC recipients, veterans, ex-felons, food stamp recipients, summer youth employees, and SSI recipients

7 FEDERAL LAW Eligibility determined on or before job offer IRS Form 8850 filed within 28 days with State Department of Labor Certification is required from State Department of Labor WOTC One year tax credit Minimum required hours worked of 120 Maximum of $2400 Welfare to Work Two year tax credit Maximum of $9000

8 TARGETED GROUPS A member of a family that is receiving or recently received TANF A member of a family that is receiving or recently received TANF An year old member of a family that is receiving or recently received food stamps An year resident of a Federally designated EZ, EC or RC A year old EZ, EC or RC resident hired between May 1 and September 15 as a Summer youth employee A Veteran who is a member of a family that is receiving or recently received food stamps A disabled person who has completed or is completing rehabilitative services from a State or the US Dept of Veterans Affairs An Ex-Felon A recipient of Supplemental Security Income benefits New Categories legislated in 2009 Disconnected Youth Unemployed Veteran

9 REQUIREMENTS TO TAKE ADVANTAGE OF THE TAX CREDIT Certification must be received from local State Employment Security Agency (SESA). An eligible employee must work a minimum of 120 hours within their first year of employment.

10 WHAT AGENCY PROVIDES THE WOTC CERTIFICATION? WOTC is a Federal Tax Credit however, it is administered through the local State Employment Security Agency (SESA). To apply for a WOTC certification the employer must mail all pertinent information to the State WOTC Unit. When the required information is received, an eligibility determination will be made and when appropriate, a certification will be issued.

11 HOW DOES IT WORK? The employer determines eligibility ibilit by including the WOTC Pre-Screening Notice as part of the application process. On or before the day employment is offered, the Pre- Screening Notice must be signed by the employer and employee and mailed to the SESA within 28 days after the employee begins work. The employer documents eligibility ibilit (based on information received from the employee) and submits documentation to the SESA. SESA certifies which h individuals id are eligible ibl for WOTC, and notifies the employer in writing for purposes of filing the tax credit.

12 8850 FORM PG 1

13 INSTRUCTIONS FOR COMPLETING IRS FORM 8850 This form must be used for the Work Opportunity Tax Credit Program. Both sections must be completed. Job Applicant Information Work Opportunity Tax Credit Name: Compete with the name of the applicant/potential employee. Social Security Number: Enter the social security number of the applicant/potential employee Address: Physical home address of applicant/potential employee. City/State/Zip Date of Birth: Only required if applicant is under age 40. Telephone Number Question #1 Question #2: If job applicant received a conditional certification from an authorized agency or a Texas Workforce Center, check the block; skip Question #3; Job applicant signs and dates the IRS Form Question #3-4: If applicant does not have conditional certification, check Questions #3-4 if any statements apply to you. Job applicant signs and dates the IRS Form Applicant s Signature: This must be an original signature by the applicant/potential

14 8850 FORM PG 2

15 EMPLOYER USE ONLY Employer name and telephone number: This should reflect the business name & business telephone number. Employer Identification Number (EIN): This is your federal employer tax number. Street Address and City/State/ZIP: Reflect business address information. Person to Contact/Telephone/Address/City/State: To be completed if a third party is the designated point of contact, or if Certification is to be mailed to a different address, i.e. a corporate headquarters. Gave information date: Date the applicant received information regarding position. Was offered job date: Date the job offer was made. Was hired date: The date of actual hire. Started job date: The date the employee physically starts to work. Note: IRS Form 8850 must be postmarked within 28 days of the start date. Signature: The signature of the employer or third party consultant must be original.

16 HIRE ACT NEW TAX CREDIT QUALIFICATIONS: Have not been employed for more than 40 hours in the previous 60 days prior to the employees start date Began employment after 3 February 2010 and before 1 January 2011 CREDIT IS: 6.2% payroll tax deduction for employer s share of Social Security tax paid $1,000 tax credit for new hires retained more than 52 consecutive weeks

17 WOTC SERVICES OFFERED BY MAXIMUS

18 PROCEDURE OPTIONS Questionnaire Call-in procedure Electronic web-based

19 NEW HIRE FORMS

20 REPORTS

21 TAX CREDIT REPORTS Activity Compliance Billing Year End Web-Based Eligibility Notification

22 COMPLIANCE REPORT

23 HOW TO CLAIM WOTC You will need the state-issued certification to claim the WOTC when you fill out your federal income tax form. Tax credits must by filed using IRS Form 5884 for the Work Opportunity Tax Credit

24 FORM 5884

25 TAX CREDIT PROJECTIONS

26 TAX CREDIT PROJECTIONS ESTIMATE OF POTENTIAL TAX CREDITS Percent Standard Compliance Annual Hires 1,000 Hires Processed 95% 950 Eligibles 20% 190 Forms Returned Timely 90% 171 Candidates Certified 60% 103 Work Required Hours 70% 72 Average Credit $1,500 Standard Compliance Total Tax Credits $108,000

27 PROS & CONS OF OUTSOURCING PROS Minimizes Manager burden Documentation follow-up and dstate t management of certificates CONS Must supply payroll feeds Fee to tax credit vendor

28 WHAT DOES THIS MEAN TO YOUR BOTTOM LINE? Streamlined Hiring process Increased profitability More $ to the bottom line 28

29 MAXIMUS PROVIDES: Supplies Eligibility determination Paperwork processed and files timely State follow-up Tax credit quarterly reports Annual tax credit filing information 29

30 SERVICES WE PROVIDE Hiring Credits WOTC State Hiring Credits Location Benefits MAXOutreach MAXIMUS exclusive Recruitment Program I-9 Management Services E-Verify Management

31 Thank You for Joining Us Today! Questions? Contact: Kitty Leggieri MAXIMUS Tax Credit and Employer Services