How do you know if your organization is close to maximizing its full WOTC potential?
Hopefully, your organization is taking advantage of the Work Opportunity Tax Credit (WOTC). If not, this federal tax credit should be on your radar because it can amount to significant tax credits. But how do you know if your organization is close to maximizing its full WOTC potential?
Forecast WOTC to Help Maximize Credits
The main use of WOTC is to help reduce your overall tax dollars owed in a given year. So, when you’re getting those returns ready, you want to claim the maximum amount allowed, as well as avoid any surprises when you file. And that’s why forecasting WOTC is so critical.
Here are two big reasons why your organization should forecast WOTC:
1. Helps keep more money in your pocket Because WOTC can often result in a significant reduction of total tax owed, tax departments should factor it in when projecting how much the company will owe and what its tax structure will look like. Forecasting WOTC credits based on how many employees qualify and how many hours they work can help companies avoid overpaying income tax on a quarterly basis, and hold on to more cash. 2. Fine tune WOTC opportunities Forecasting is important to HR departments as well. Increasingly, they are measured on the amount of WOTC credit they facilitate throughout the year. Therefore, if they have access to the same forecasting as the tax department, they can better judge how they’re contributing to the company’s bottom line. And if need be, they can more actively manage the employees in their WOTC program to better meet their goals. However, companies tell us they often lack the internal resources and data to create a reliable forecast. That’s why we created our proprietary WOTC forecast tool, NowCAST, for easy scenario analysis. It helps to quickly allows HR departments to alternate between possible outcomes. Giving them the insight needed to help capture additional tax credits. Want to hear even more benefits of forecasting? Listen to our podcast, "The Truth About WOTC Forecasting," from our Workforce Wise series. Other recent episodes include: