Smart Onboarding Pays Off
Andy Scheu • November 20, 2024

Smart Onboarding: Saving Money with Tax Credit Screening

Hiring new team members is an exciting endeavor! It's a chance to grow and bring fresh talents into your team. But did you know this process can also save your business money? That's where Time & Pay Solutions steps in. This handy system helps companies streamline their onboarding while taking advantage of available tax credits. By integrating tax credit screening, businesses can simplify hiring and enjoy financial perks that ease the cost of bringing in new employees. Let's dive into how Time & Pay Solutions can make your onboarding process more efficient and beneficial!

An Efficient Onboarding Process with Tax Credit Screening

Creating a smooth onboarding process is crucial when you're welcoming new people to your team. But did you know that this step can also bring significant financial savings through tax credits? Time & Pay Solutions is here to help. This tool enables businesses to unlock valuable tax incentives while ensuring their new hires transition smoothly.

Building Employee Profiles: The Importance of a Questionnaire

At the heart of a successful onboarding process is a detailed questionnaire that collects key information from new hires. As the system explains, "this will include a questionnaire to go out to all employees that you're onboarding." It's not just about gathering phone numbers or addresses; it's about ensuring that all necessary data is captured for legal and operational purposes.

Think of it as setting the foundation for a complete employee profile. This information is not only important for company records but also crucial in verifying eligibility for potential tax credits.

Finding Savings: Screening for Tax Credits

One of the standout features of Time & Pay's onboarding approach is screening candidates for tax credits. This can substantially cut hiring costs, especially when hiring from government-supported groups. "If you're not using the system to onboard, you can also screen individuals by choosing the Screen Candidates for Tax Credits button," making sure that any business can take advantage of this, even if they're not fully integrated into the system yet.

When candidates enter their basic information, they receive an email to proceed further. This user-friendly approach ensures the checking process is easy for new hires, keeping the hiring process quick and hassle-free.

What Information Do Candidates Need to Supply?

To make the screening process effective, candidates must provide certain information such as their name, address, phone number, email, and Social Security number. They'll also answer questions that help determine their eligibility for tax credits. These questions identify which potential employees align with tax benefit programs.

By encouraging candidates to accurately supply this information promptly, your business can find out who might qualify for these tax savings more effectively.

The Advantages of Tax Credit Screening

Screening for tax credits is beneficial for both businesses and new employees. For employers, it offers a way to significantly lower payroll costs, which can be particularly helpful to small businesses or sectors like healthcare and construction. It also aligns with incentives to promote workplace diversity, hiring from groups such as veterans or long-term unemployed individuals.

Furthermore, tax credit screening boosts a company's image as a socially responsible employer, creating a win-win situation for everyone involved.

Automation in Onboarding: A Step Forward

Utilizing technology and automation can simplify tasks like tax credit screening, increasing efficiency across the board. The "Screen Candidates for Tax Credits" button is an excellent example of how automated processes are changing onboarding. Companies can trust automated solutions to handle repetitive tasks, reducing errors while letting HR staff focus on strategic priorities.

Automation also ensures that candidate processing is consistent and compliant with legal standards. Businesses across various industries use technology to streamline admin work and boost overall efficiency.

Conclusion: Smarter Onboarding Makes Sense

Onboarding is an opportunity for businesses to improve processes and leverage available benefits. By employing structured tax credit screening, you can enhance the hiring process for both your organization and your employees.

With Time & Pay Solutions , efficient and compliant onboarding is within reach. By adopting this system, businesses can turn new hire challenges into opportunities for growth and savings.

If you're involved in industries like healthcare or logistics, taking on improved practices now with Time & Pay Solutions can lead to significant savings and a smoother onboarding experience later.

Your Questions on WOTC Answered

How do you claim WOTC?

Claiming the Work Opportunity Tax Credit (WOTC) involves hiring people from specific groups identified by the IRS. Fill out Form 8850, "Pre-Screening Notice and Certification Request for the Work Opportunity Credit," before making the job offer, and send this along with certification documents to the state workforce agency within 28 days of the employee's start.

Is WOTC considered taxable income?

No, the WOTC isn't taxable income. Instead, it reduces the taxes owed. However, you might need to adjust wage-related expenses reimbursed through WOTC.

How long can you claim WOTC?

The WOTC is typically available for the first year of employment for hires from the eligible groups. Some categories may offer extended claim periods based on specific wages, but it generally doesn't extend beyond the first year.

Filling out the WOTC form correctly

Begin with Form 8850, completed by you and the employee, for pre-screening eligibility. Employers should also fill out ETA Form 9061 or ETA Form 9062. Submit these to the state workforce agency to finalize your claim. Get the timing right, as submissions must be timely to qualify.

By navigating this process smoothly, you can maximize what WOTC offers, boosting your business with potential tax savings while supporting a diverse workforce.

In conclusion, by focusing on tax credit screening during onboarding, businesses enhance efficiency and tap into significant savings. Time & Pay Solutions offers your business the chance to seize these opportunities effectively.

FAQs About the Work Opportunity Tax Credit (WOTC)

Can WOTC be claimed retroactively?

Yes, it's possible in some cases. If you hired an eligible worker but missed claiming the credit that year, you might file an amended tax return. Make sure to follow IRS guidelines and deadlines for these claims closely.

Claiming the WOTC: A quick guide

You'll need IRS Form 8850, completed before extending a job offer. This form must reach the relevant state workforce agency no more than 28 days after the employee begins work. After gaining certification, you then claim the credit via IRS Form 5884 when filing your taxes.

Does WOTC have an expiration date?

WOTC isn't permanent and does carry expiration dates. The current provision extends to December 31, 2025, but keep an eye on legislative updates that might change the timeline.

Are WOTC credits refundable?

No, WOTC credits aren't refundable. They can lower your tax liability to zero but won't result in refunds. Should the credit exceed your tax liability, you might carry it back one year or forward up to 20 years.

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Doll hands hold tiles spelling

Understanding the New “No Tax on Tips” Provision: What Employers of Tipped Workers Need to Know

By Andy Scheu • September 4, 2025
The recently introduced One, Big, Beautiful Bill Act (OBBB Act) brings significant changes for businesses employing tipped workers. A key provision is the “no tax on tips” rule , which removes certain federal tax liabilities for qualified tips. However, not all employees or industries qualify, so it’s essential to understand how this impacts your workforce. To qualify: Tips must be received in an occupation that customarily and regularly received tips on or before December 31, 2024 . Certain fields— healthcare, athletics, and the performing arts —are specifically carved out and do not qualify. Employers must be able to identify if their employees fall into one of the designated Treasury Tipped Occupation Codes (TTOCs) . 📋 Full List of Eligible Tipped Occupations  Below is the complete preliminary list of occupations the Treasury and IRS have identified as customarily tipped roles. Each entry includes the TTOC code, occupation title, description, examples, and related SOC codes . This list is expected to form the basis of official IRS regulations. 🍽️ Beverage & Food Service 101 – Bartenders | Mix and serve drinks (barkeep, sommelier) | SOC 35-3011 102 – Wait Staff | Serve food & beverages to patrons (cocktail waitress) | SOC 35-3031 103 – Food Servers, Nonrestaurant | Serve outside restaurant (room service, beer cart) | SOC 35-3041 104 – Dining Room & Cafeteria Attendants/Bartender Helpers | Clean, reset, assist | SOC 35-9011 105 – Chefs & Cooks | Prepare/cook meals (chef, caterer, food truck cook) | SOC 35-1011, 35-2011, etc. 106 – Food Prep Workers | Prep cold foods, slice meats | SOC 35-1012, 35-2021 107 – Fast Food & Counter Workers | Serve at counters, may prep | SOC 35-3023 108 – Dishwashers | Clean dishes & equipment | SOC 35-9021 109 – Host Staff | Welcome/seat patrons (maître d’) | SOC 35-9031 110 – Bakers | Bake breads, pastries | SOC 51-3011 🎲 Entertainment & Events 201 – Gambling Dealers | Operate games of chance | SOC 39-3011 202 – Gambling Change Persons & Cashiers | Exchange money, tokens | SOC 41-2012 203 – Gambling Cage Workers | Handle casino financials | SOC 43-3041 204 – Gambling & Sports Book Writers/Runners | Take bets, operate keno/bingo | SOC 39-3012 205 – Dancers | Perform dances | SOC 27-2031 206 – Musicians & Singers | Play instruments, sing | SOC 27-2042 207 – DJs (Non-Radio) | Play music for live audiences | SOC 27-2091 208 – Entertainers/Performers | Comedians, magicians, clowns | SOC 27-2099 209 – Digital Content Creators | Streamers, influencers | SOC 27-2099 210 – Ushers/Ticket Takers | Assist patrons at events | SOC 39-3031 211 – Locker/Coatroom Attendants | Provide personal item service | SOC 39-3093 🏨 Hospitality & Guest Services 301 – Baggage Porters/Bellhops | Handle luggage | SOC 39-6011 302 – Concierges | Assist guests with services | SOC 39-6012 303 – Hotel/Resort Desk Clerks | Register, check in/out guests | SOC 43-4081 304 – Maids & Housekeeping Cleaners | Clean hotel rooms | SOC 37-2012 🏡 Home Services 401 – Home Maintenance/Repair Workers | Handyman, roofer, painter | SOC 49-9071 402 – Landscaping/Groundskeeping Workers | Lawn/garden maintenance | SOC 37-3011 403 – Home Electricians | Install/repair wiring | SOC 47-2111 404 – Home Plumbers | Install/repair pipes | SOC 47-2152 405 – HVAC Mechanics/Installers | Heating/AC repair | SOC 49-9021 406 – Appliance Installers/Repairers | Fix/install household appliances | SOC 49-9031 407 – Home Cleaning Workers | House/pool/carpet cleaners | SOC 37-2012 408 – Locksmiths | Keys, locks, safes | SOC 49-9094 409 – Roadside Assistance Workers | Tow truck, tire repair | SOC 49-3023, 53-3032 👤 Personal Services 501 – Personal Care & Service Workers | Aides, butlers, companions | SOC 31-1122 502 – Private Event Planners | Wedding/party planning | SOC 13-1121 503 – Private Event/Portrait Photographers | Wedding/headshot photography | SOC 27-4021 504 – Private Event Videographers | Record events | SOC 27-4031 505 – Event Officiants | Weddings/funerals officiants | SOC 21-2010 506 – Pet Caretakers | Groomers, walkers, sitters | SOC 39-2021 507 – Tutors | Academic tutoring | SOC 25-3041 508 – Nannies/Babysitters | Child care | SOC 39-9011 💇 Personal Appearance & Wellness 601 – Skincare Specialists | Facials, esthetics | SOC 39-5094 602 – Massage Therapists | Therapeutic massage | SOC 31-9011 603 – Barbers/Hairdressers/Cosmetologists | Hair & barber services | SOC 39-5011 604 – Shampooers | Shampoo/rinse hair | SOC 39-5093 605 – Manicurists/Pedicurists | Nail care | SOC 39-5092 606 – Eyebrow Technicians | Threading, waxing | SOC 39-5091 607 – Makeup Artists | Design/apply looks | SOC 39-9031 608 – Fitness Trainers/Instructors | Personal/group exercise | SOC 27-1019 609 – Tattoo Artists & Piercers | Tattoos, body piercing | SOC 51-6052 610 – Tailors | Garment fitting, repair | SOC 51-6041 611 – Shoe/Leather Workers & Repairers | Cobbler, shoe shiner | SOC 39-5012 🎓 Recreation & Instruction 701 – Golf Caddies | Assist golfers | SOC 39-3091 702 – Self-Enrichment Teachers | Piano, art, knitting instructors | SOC 25-3021 703 – Recreational/Tour Pilots | Helicopter/balloon tours | SOC 25-3021 704 – Tour Guides/Escorts | Sightseeing/museum guides | SOC 39-7011 705 – Travel Guides | Expeditions, cruises | SOC 39-7012 706 – Sports & Recreation Instructors | Ski, dive, surf instructors | SOC 53-2012 🚗 Transportation & Delivery 801 – Parking/Valet Attendants | Park/tend vehicles | SOC 53-6021 802 – Taxi/Rideshare Drivers & Chauffeurs | Transport passengers | SOC 53-3054 803 – Shuttle Drivers | Scheduled route drivers | SOC 53-3053 804 – Goods Delivery People | Deliver goods/packages | SOC 53-3031 805 – Vehicle & Equipment Cleaners | Car wash/detailers | SOC 53-7061 806 – Private/Charter Bus Drivers | Motor coach/tour bus | SOC 53-3052 807 – Water Taxi/Charter Boat Workers | Operate boats | SOC 53-5022 808 – Rickshaw/Pedicab/Carriage Drivers | Bike taxis, horse carriages | SOC 53-6099 809 – Home Movers | Furniture movers | SOC 53-7062 ✅ What Employers Should Do Now Review Employee Roles – Determine if any fall under the TTOC list. Adjust Payroll Processes – Coordinate with your payroll provider to ensure compliance with new tip tax rules. Stay Updated – Treasury/IRS will finalize regulations soon, and some occupations may be clarified or excluded. Educate Managers & Staff – Make sure supervisors understand how tips are treated under the new law. 🔗 Resources Official Treasury & IRS Guidance (forthcoming)

Payroll on the Rocks? Why Restaurants Need to Rethink How They Handle Tipped Wages in 2025

By Andy Scheu • August 6, 2025
A wage and tax statement for 2025 is shown on a white background.

New Tax Breaks on Overtime and Tips: What Employers and Employees Need to Know

By Andy Scheu • July 29, 2025
New Tax Breaks on Overtime and Tips: What Employers and Employees Need to Know A major shift in tax policy is here, and it could mean more money in the pockets of millions of American workers — especially those who rely on tips or regularly work overtime. As part of the One Big Beautiful Bill (OBBB), signed into law on July 4, 2025, Congress introduced two key tax deductions: one for qualified tip income and another for overtime premium pay. These changes are designed to reward hard-working Americans and reduce the income tax burden on lower- and middle-income earners. But what does this mean in practice? Let’s break it down. No Tax on Tips: A Win for Service Industry Workers Under the new law, workers in tipped professions — such as servers, bartenders, hotel staff, and others — can now deduct up to $25,000 in tips from their federal taxable income each year. This deduction is retroactive to January 1, 2025 , and is set to remain in effect through the end of 2028. To qualify: The tips must be customary and reported to the employer . The worker must be in a recognized “tipping occupation,” such as those listed in prior IRS guidance. The deduction begins to phase out for individuals earning more than $150,000 (or $300,000 for joint filers). This means a server who reports $15,000 in tips could potentially deduct the full amount from their income when calculating their taxes — reducing taxable income and potentially saving hundreds or even thousands of dollars in federal taxes. This deduction does not apply to Social Security and Medicare taxes. Those payroll taxes are still assessed on total wages, including tips. No Tax on Overtime: Relief for Non-Exempt Employees The law also introduces a deduction of up to $12,500 per individual (or $25,000 for joint filers) for overtime premium pay. This refers specifically to the “time-and-a-half” portion paid for hours worked beyond 40 in a week under the Fair Labor Standards Act (FLSA). It’s important to understand what qualifies: Only non-exempt employees (those entitled to overtime under the FLSA) can claim this deduction. The deduction applies only to the premium portion — that is, the extra 50% above regular hourly pay. High-income earners will see a phase-out starting at $150,000 (individuals) or $300,000 (joint filers). For example, if an hourly worker earned $20/hour and worked 10 hours of overtime in a week, the overtime premium ($10/hour × 10 hours = $100) would be eligible for the deduction — not the full $300 in overtime pay. If that worker consistently earned similar overtime throughout the year, they could reach or exceed the maximum deduction and realize significant federal tax savings . What This Means for Employers Although the new deductions apply to individual tax returns, employers will play a critical role in ensuring that both workers and the IRS have accurate records. Here are the key responsibilities employers now face: Payroll Reporting Enhancements Employers must update their payroll systems to separately track qualified tips and overtime premium pay . These amounts must now be clearly designated on year-end tax forms like the Form W-2 . Form and Recordkeeping Requirements Employers will need to include additional information on employee tax forms, including: A breakdown of earnings by type (regular, overtime premium, tips). Occupation codes that identify whether the employee is in a tipping role. System and Software Updates Payroll vendors and in-house systems must be adjusted to reflect the new codes. For 2025, a “reasonable method” grace period applies, but in future years, precision will be required. Classification Reviews Employers may need to re-evaluate FLSA classifications to ensure that workers are properly labeled as exempt or non-exempt. Improper classification could result in missed deductions or even penalties. Communication and Training HR and payroll teams should be trained on the new rules, and employers should proactively communicate with employees about the potential benefits and what information will be required at tax time. How Employees Benefit — and What They Need to Do These changes are being praised as a way to put more money into the hands of frontline workers, but the deductions don’t apply automatically. Employees need to take certain steps to ensure they receive the tax benefits they’re entitled to. Maintain Accurate Records Employees should keep good records of their reported tips and overtime hours . While much of this will be available on their W-2, they should verify it for accuracy. Understand Eligibility Limits High earners may not qualify, and the deductions only apply to properly classified pay. Employees paid “overtime” who are exempt under the FLSA may find their pay doesn’t count. Prepare for Tax Filing These deductions will likely appear as line items on Form 1040 or a new IRS schedule. Employees should consult a tax preparer or financial advisor, especially during the first year of implementation. Track Annual Caps Workers should be aware of the annual deduction limits and ensure they do not over-report. Overstating deductions could trigger audits or penalties. What This Means in Dollars According to preliminary estimates from tax experts: A tipped worker who earns $20,000 in tips could save between $1,800–$2,200 in federal income taxes, depending on their tax bracket. An hourly worker earning $8,000 in qualified overtime premium pay might reduce their federal taxes by around $800–$1,200 . For households that include both tipped and overtime-earning workers, the combined benefit could reach $4,000–$5,000 annually — a significant reduction in their federal tax liability. Final Thoughts This new legislation signals a clear shift in tax policy — one that rewards work done during evenings, weekends, and holidays, and recognizes the financial challenges of service industry workers. For businesses, it means adjusting payroll systems, refining classifications, and improving documentation . For employees, it means paying attention to how their income is reported and taking full advantage of available tax savings . Time & Pay is here to help employers navigate this transition. Our systems can be tailored to properly track and report eligible tip and overtime income, ensuring compliance and helping your employees take advantage of these new deductions. If you’re unsure whether your payroll processes are ready, now is the time to evaluate and prepare. Need help tracking qualified wages and ensuring accurate reporting? Contact Time & Pay today — we’ll help you get compliant and keep your employees informed.