Imagine you are a hiring manager interviewing three highly qualified job seekers for a single position. You finish each interview and thank each applicant. But then, the third applicant hands you two checks made out to your company and cashable over the next two years. These are big checks totaling $7,800. You think, “Is this for real? This will cover nearly half of the salary…” So it doesn’t happen quite like that, there are no big checks to hand out, but there is big money to be had!
Disability tax credits are a hidden gem for every employment specialist. Don’t feel alone if you don’t know about them. Job seekers don’t know about them. Employers rarely know about them. Most career counselors don’t know about them. But when we do, they are game-changing especially because there is no limit to the number of employees who make an employer eligible for these tax credits.
Picture your client, John, applies for a job. He does great on the interview and seems destined for onboarding. Suddenly, the employer starts to backpedal and you’re not sure why. Finally, the employer calls with the bad news: their accountant says there just isn’t enough money for a new employee.
Yup. We’ve all been there.
But that doesn’t have to be the end of John’s story. Thanks to the Work Opportunity Tax Credit and Maryland Disability Employment Tax Credit, nearly half of John’s wages could come at no cost to the employer. Let’s say John would work 15 hours per week at $12 per hour. With two weeks’ unpaid vacation, that’s a total of 750 hours per year and $9,000 in wages. Over two years, John would earn $18,000 and the employer says they just can’t afford that.
But because you read this blog, you know about the hidden gem: hiring John makes the employer eligible for $7,800 in tax credits over those first two years. Suddenly, “not enough” looks like “plenty to go around.”
This scenario relies on two of the most straightforward tax benefits available to employers: the Work Opportunity Tax Credit and the Maryland Disability Employment Tax Credit. Read on to learn how employers can qualify for these and other tax advantage programs.
Federal Tax Advantages
The Work Opportunity Tax Credit (WOTC) is a federal tax credit designed to encourage employers to increase job opportunities for targeted groups of Americans, including those living with disabilities. Ticket to Work (TTW) ticketholders, Vocational Rehabilitation (VR) clients, and SSI recipients who opt to disclose their disability provide employers with the opportunity to take a federal tax credit of up to $2,400 in the first year of employment. For an employee working a minimum of 400 hours, this tax credit will offset 40% of wages, up to the first $6,000 earned (40% x $6,000 = $2,400).*
How to make it happen:
- Complete the WDETA-9061, Individual Characteristics Form for WOTC.
- Complete your client’s section on the SSA-8850, Pre-screening Notice and Certificate Request for the WOTC.
- Provide the WDETA-9061 and the SSA-8850 to the employer if and when your client chooses to disclose a disability: at the application, at the interview, when a job is offered, but no later than the first day of work.
- The employer must forward the completed WDETA-9061 and the SSA-8850 to their local State Workforce Agency (SWA) within 28 days of the employee’s start date.
- Once approved, a certificate will be returned to the employer with instructions to apply the WOTC.
*There is a lesser WOTC tax credit for employees working between 120 and 400 hours.
**If the job candidate is a veteran or a long-term TANF recipient, use those classifications instead of the VR or SSI classification as it will increase the tax credit for the employer for a total of up to $9,600 over two years. This is the complete WOTC targeted groups list.
The Disabled Access Credit allows small businesses to claim expenses they incur in providing accommodations to employees with disabilities. Eligible businesses must employ 30 or fewer full-time employees with gross receipts not exceeding $1 million dollars annually. By saving their receipts and completing SSA-8826 Disabled Access Credit, employers can deduct 50% of qualifying expenses.
The Architectural Barrier Removal Tax Deduction is open to businesses of all sizes that remove architectural and transportation barriers to increase accessibility for individuals with disabilities. Up to $15,000 of qualifying expenses can be claimed annually.
State of Maryland Tax Credits
The Maryland Disability Employment Tax Credit (MDETC) is a state tax credit designed to encourage employers to increase job opportunities specifically for Marylanders living with a disability. Ticket to Work (TTW) ticketholders, Vocational Rehabilitation (VR) clients, SSI and SSDI recipients who opt to disclose their disability provide employers with the opportunity to take a state tax credit of up to $2,700 in each of the first two years of employment. This tax credit will offset 30% of wages, up to the first $9,000 earned for each of the first two years of employment: a total maximum benefit of $5,400. The same program allows employers to deduct an additional $900 for childcare and/or transportation costs provided by the employer over the same period.
How to make it happen:
- Complete the MDETC form.
- If an applicant is a DORS client, the DORS counselor will sign as the Agency Representative.
- Applicants who receive SSDI or SSI but are not DORS clients will self-certify by attaching a copy of their SSA benefit letter or benefit check to the MDETC form.
- Provide the MDETC form to the employer when applying, when interviewing, when a job is offered, but no later than the first day of work.
- The employer must forward the completed MDETC to the Maryland Department of Labor (MDOL) within 30 days of the employee’s start date.
- Once approved, a certificate will be returned to the employer with instructions to file the MDETC.
Employers should speak to their tax professionals about filing for the federal and state tax credits.
And now you know! Get out there and spread the word—and don’t hesitate to contact Deborah Temple at 443-499-6882 or at firstname.lastname@example.org with any questions you may have.