WOTC is a federal income tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
The WOTC tax credit is a one-time tax credit for each new hire – and there is no limit to the number of new hires who can qualify an employer for a tax credit.
The WOTC tax credit is a one-time tax credit for each new hire – and there is no limit to the number of new hires who can qualify an employer for a tax credit.
What are the WOTC target groups ?
- Qualified Veterans
- Qualified Disabled Veterans
- Qualified Unemployed Veterans
- Qualified Designated Community Resident
- Qualified Ex-Felons
- Qualified Vocational Rehabilitation Recipient (requires release form)
- Qualified Supplemental Nutritional Assistance Program (SNAP) (Food Stamps) Recipient
- Qualified Supplemental Security Income (SSI) Recipient (requires release form)
- Qualified Recipients of Temporary Assistance to Needy Families (TANF)
- Qualified Summer Youth
The WOTC Program has been reauthorized through December 31, 2019. An employer must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. An eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state workforce agency within 28 days after the eligible worker begins work.
The credit is limited to the amount of the business income tax liability or social security tax owed.
The credit is limited to the amount of the business income tax liability or social security tax owed.
The maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired and the number of hours worked in the first year. Employees must work at least 120 hours in the first year of employment to receive the tax credit.
Relatives or dependents (this includes a spouse), majority owners of the employer, and former employees do not qualify for WOTC.
Relatives or dependents (this includes a spouse), majority owners of the employer, and former employees do not qualify for WOTC.
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