Authored By: Connie Ward, from the Logan Bookkeeping Department
What is WOTC?
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.
What does WOTC do?
WOTC helps targeted workers move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are able to reduce their income tax liability.
How large is the tax credit?
The maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired.
Eligible New Hires
A veteran who is:
• A member of a family that received SNAP benefits (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date.
• Entitled to compensation for a service-connected disability:
o Hired within 1 year of discharge or release from active duty
o Unemployed at least 6 months in the year ending on the hiring date
o At least 4 weeks in the year ending on the hiring date
o At least 6 months in the year ending on the hiring date
Please note that to be considered a veteran eligible for WOTC, an individual must meet these two standards:
• Have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability
• Not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date
Long-term Temporary Assistance for Needy Families (TANF) Recipient:
A member of a family that meets one of the following circumstances:
• Received TANF benefits for at least 18 consecutive months ending on the hiring date.
• Received TANF benefits for at least 18 consecutive or non-consecutive months after August 5, 1997, and has a hiring date that is not more than 2 years after the end of the earliest 18-month period after August 5, 1997.
• Stopped being eligible for TANF payments during the past 2 years because a Federal or state law limited the maximum time those payments could be made.
Short-term TANF Recipient:
• A member of a family that received TANF benefits for any 9-month period during the 18-month period ending on the hiring date.
SNAP (food stamp) Recipient:
• An 18-39 year old member of a family that received Supplemental Nutrition Assistance Program (SNAP) benefits for the 6 months ending of the hiring date or received SNAP benefits for at least 3 of the 5 months ending on the hiring date.
Designated Community Resident:
• An 18-39 year old who lives within one of the federally designated Rural Renewal Counties or Empowerment Zones.
Vocational Rehabilitation Referral:
• An individual with a disability who completed or is completing rehabilitative services from a state-certified agency, an Employment Network under the Ticket to Work program, or the U.S.
Department of Veteran Affairs.
• An individual who has been convicted of a felony and has a hiring date that is not more than 1 year after the conviction or release from prison.
Supplemental Security Income (SSI) recipient:
• A recipient of SSI benefits for any month ending during the past 60-day period ending on the hire date.
Summer Youth Employee
• A 16 or 17 year-old youth who works for the employer between May 1 and September 15 and lives in an Empowerment Zone.
Employers use Form 8850 to pre-screen and to make a written request to a state workforce agency to certify an individual as a member of a targeted group.