Work Opportunity Tax Credit
Valuable Hiring Incentives
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers who hire individuals from certain target groups that have consistently faced significant barriers to employment. The goal of the WOTC is to incentivize employers to hire from these groups and thus help these individuals find gainful employment.
The WOTC is designed to promote workplace diversity and provide economic opportunities to individuals who may otherwise struggle to find employment.
Work Opportunity Tax Credit Opportunities
Employers can receive tax credits for hiring employees from targeted groups that have traditionally faced barriers to employment. The credit can be claimed by for-profit employers to be used against income tax and non-profits to be used against payroll tax.
The credit amounts vary depending on the targeted group and the number of hours worked by the employee, with a maximum credit of $9,600 per qualified new hire. If you’re an employer, consider exploring the WOTC to benefit both your business and potential employees.
Targeted Groups
- Qualified Veteran – A veteran who was unemployed for at least 4 weeks (whether consecutive or not) or a veteran entitled to service-connected disability compensation.
- Qualified Ex-Felon – An individual who was convicted of a felony and hired within a year after their date of conviction or release from prison or jail.
- Qualified Summer Youth Employee – An individual who has a principal place of residence within an empowerment zone, enterprise community, or renewal community and is employed between May 1 and September 15.
- Designated Community Resident (DCR) – An individual who resides within an empowerment zone, an enterprise community, or a rural renewal community.
- Qualified Long-Term Unemployment Recipient – An individual who has been unemployed for at least 27 consecutive weeks at the time of hiring and who received unemployment compensation during some or all of the unemployment period.
- Vocational Rehabilitation Referral – A person who has a physical or mental disability and has been referred to the employer while receiving or upon completion of rehabilitative services.
- Qualified IV-A Recipient –An individual who is a member of a family receiving assistance under a state program related to Temporary Assistance for Needy Families (TANF).
- Qualified Supplemental Nutrition Assistance Program (SNAP) Benefits Recipient – An individual who, on the hiring date, is a member of a family that received SNAP benefits for the previous 6 months or at least 3 of the previous 5 months.
- Qualified Supplemental Security Income (SSI) Recipient – An individual who received SSI benefits for any month ending within the 60-day period that ends on the hire date.
- Long-Term Family Assistance Recipient – An individual who, at the time of hiring, is a member of a family that received assistance under an IV-A program for at least the prior 18 consecutive months.
Work Opportunity Tax Credit by the Numbers
20%
Of new employee hires are potentially eligible
$2,150
Average credit for each qualified new hire
40%
Cashflow increase to your business
No Limit
To the amount of credit available
Hull & Knarr Experience
01
Pre-Screening
Complete Pre-Screening Notice and Certification Request for the Work Opportunity Credit. Our team works with the job applicant and the employer to obtain the information necessary for certification.
02
GATHER
Next, our team collects documents to verify the applicant’s identity and to clear conditional certifications with State Workforce Agencies, vocational rehabilitation agency, or another participating agency.
03
Submission
After the standard data collection, we submit the completed forms and documentation to the state workforce agency (SWA) within 28 calendar days after the new hire’s start date.
04
Certification
The State Workforce Agency will review the submitted forms and determine if the new hire meets the eligibility criteria for one of the WOTC target groups. If the new hire is eligible, the SWA will issue a certification to the employer.
05
Claiming
Once certified, our team calculates the amount of the credit and prepares the appropriate tax forms. Hull & Knarr works with you and your accounting firm to properly claim the credits on the Federal income tax return.
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