Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit Program, or WOTC, gives employers a federal income tax credit for employing personnel from specific selected groups. Tax Credit Group, Inc. provides administrative services to help Companies/Corporations through the Screening and Administrative process.
Work Opportunity Tax Credit (WOTC) Program is a federal tax incentive program that was designed to encourage employers to hire individuals with special employment needs. Each qualified new employee generally entitles you to a tax credit of either 25% or 40% of qualified wages up to $6000 earned during the certified employee’s first year of employment. The maximum credit is $9600 per employee.
The WOTC program offers employers a credit against their federal tax liability for hiring individuals from any one target groups:
Welfare Recipient (AFDC/TANF)
Member of a family receiving Temporary Assistance for Needy Families (TANF) payments for any nine-month period during the 18 months preceding the start date.
An individual who was a veteran of the armed forces; discharged or released from active duty within five years of their hire date; and received unemployment compensation under state or federal law for at least four weeks in the 12 months preceding the hire date.
An individual who has been convicted of a felony or released from prison in the 12 months prior to the individual’s start date.
Designated Community Resident*
An 18-39 year old resident of one of the federally designated Empowerment Zones (EZs) or Rural Renewal Counties.
An individual who completed or is completing a vocational rehabilitative program, individual work plan or Department of Veterans Affairs rehabilitative program.
An individual aged 16-17, who is hired between May 1 and September 15 and who lives in a Federal Empowerment Zone, Enterprise Community, Renewal Community or Rural Renewal County.
Food Stamp Recipients
An individual aged 18-39, who is a member of a family that has received food stamps for six months prior to the start date, OR received food stamps for at least three months of the five-month period ending on the start date.
An individual who is receiving supplemental security income benefits for any month ending within the 60-day period ending on the start date.
Long Term Family Assistance Recipients (formerly Welfare-to-Work)
An individual who is a member of a family: That received Temporary Assistance for Needy Families (TANF), for at least the 18 consecutive months ending on the starting date; OR Whose TANF eligibility expired under federal or state law after August 5, 1997, for applicants hired within two years after their eligibility expired; OR That received TANF for a total of at least 18 months (whether or not consecutive), beginning after August 5, 1997, and has a starting date that is not more than two years after the end of the earliest 18-month period.
NEW Long Term Unemployed
An individual who has been unemployed at least 6 months and received unemployment compensation under state or federal law.
A veteran who is any of the following-
- A member of a family receiving assistance under a food stamp program for at least three months, all or part of which is during the 12 months ending on the hiring date
- Entitled to compensation for a service-connected disability and has a hire date that is not more than a year after having been discharged or released from active duty; or has a period of unemployment of six months or more during the one-year period ending on the hire date
- Has a period of unemployment of at least four weeks, but less than six months, during the one-year period ending on the hire date
- Has a period of unemployment of at least six months during the one-year period ending on the hiring date.
Calculating the Work Opportunity Tax Credit (WOTC)
Most target groups’ maximum credit is $2,400. The following groups are eligible to receive a higher credit:
- $4,800 for each new disabled veteran hire, and
- $9,600 for each new long-term family assistance recipient hired over a two-year period.