Recently we’ve heard from a quite a few people that said they don’t participate in the Work Opportunity Tax Credit Program (WOTC) because they “don’t hire people that would qualify.” More often than not, after a brief discussion, we were able to discover that they did hire qualified employees. We’re not sure where the misunderstandings are coming from, but we thought this to be great time to revisit the list of WOTC target groups so more companies can be better informed when exploring the program.
There are 9 Target Groups of employees that U.S. employers can hire to earn WOTC tax credits. Below we’ve provided a brief overview of each target group without going into all specifics.
1.) Military Veterans
Military veterans must meet one of two criteria in order to qualify for any credits. They must have served at least six months of active duty or been discharged from active duty because of an service-related injury. Secondly, active duty lasting three months or longer must be completed at least sixty days before they’re hired.
2.) Long Term Unemployed
Employees that have been unemployed for a combined 6 months of the previous 12 months prior to their hire date.
3.) SNAP (Food Stamps) Recipients
Eligible SNAP applicants are identified as those who are between 18 and 39 and live in a household that is receiving food stamp aid.
4.) TANF Recipients (Temporary Assistance for Needy Families)
Hired employees meet the criteria if they have been on TANF benefits for at least 18 months consecutively or cumulatively prior to their hire date.
New hires who received Social Security Income as part of Title XVI define this target group.
6.) Vocational rehabilitation referrals
Individuals qualify if they have physical or mental disabilities and complete a certified vocational rehabilitation program.
7.) Empowerment Zones
Candidates under 40 meet this criteria as long as they reside in federally- designated Rural Renewal or Empowerment Communities.
8.) Summer Youth
16-17 year-old new hires, residing in Empowerment Zones are categorized through the summer youth target group. New hires must take place from mid-May through September
WOTC-qualified ex-felons include those with release dates within 12 months of their hire date.
Many companies have dismissed participating in the WOTC program because the believed that no one they hired would qualify. Sadly this has been a costly mistake for a lot of companies. With the maximum credit per employee being $2,500, $4,500, or $9,600 you can see it doesn’t take that many qualifying employees to add up to significant tax savings. We typically see that 20-25% of new hires qualify for the program.