Tax Credits Blog

Behind the Scenes at Employer Incentives

Tax Credits are a tricky business. Lots of paperwork, record keeping and following up.  Here’s a look at what we do behind the scenes at Employer Incentives.

From when your new hires sign the forms, the clock starts ticking. We have 28 days to receive the forms, do all our in-house processing, and file them with the individual States. WOTC and the VOW To Hire Heroes Act are federally mandated programs and tax credits, but the states control the processes. When we receive the 8850 and 9600, our staff goes through each form and searches several federal and state government databases on each applicant. Once we feel we have researched each applicant to the fullest, we then file the applications with the state within the 28 day window. After this, we play the waiting game.

Some states are faster than others, some are lenient, and some are very strict with the rules. This is why some states have a higher certification rate than others. We are in constant contact with all the SWA’s (State Workforce Agencies) making sure that they are doing all they can do to get your employees certified.

The states will then send us one of 3 letters for each individual: Certified, Denied, or Needs more Info.  When we receive a denied letter, there really isn’t anything we can do. The state has decided that this person isn’t eligible for whatever reason. When we get a needs letter, we go to work exhausting every resource possible to get the supporting documentation to the state in order to certify this employee. We have contacts at the National Records Center and Social Security Administration for verifying veterans and disability records. We will sometimes contact our clients for the supporting documentation. The documentation can be as simple as a copy of the employee’s records (Driver’s License, W4 or I9), or something more difficult to obtain such as Proof of Veteran Status, disability income, conviction/release dates, or vocational rehab services (these are job programs run by the government and Veteran’s Administration). To get the most employees certified, if an employee checks off any of these hard to prove target groups PLEASE ask them for documentation and send us a copy. In fact, it would really help us help you get all the credits you can.

When we get Certification letters in, the other side of our service kicks in. We will start sending you a monthly Excel Spreadsheet with the names of the certified employees and some blank cells asking for payroll data. In order to calculate the correct amount of credits, we need the hours worked and gross pay for the employees over certain specific time periods. The time periods are important on this worksheet, as WOTC has different levels of tax credits for each target group and hours worked. Some are even credits you can take again during the employee’s second year with you. We also use these monthly worksheets to keep track of the credits already earned in prior months, so you can be assured you are getting the correct credits as well as the maximum possible.

At the end of the tax year, you will get a report that details your credit activity for the year, a copy of the certification letters for your records, and a filled out IRS Form 5884 that you include with your tax return. Give that to your accountant (or file it yourself), and Voila! You have just put money, FREE MONEY, back in your pocket! (And who doesn’t want free money????)