Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire and retain individuals from target groups with significant employment barriers (e.g., veterans, ex-felons, etc.). Employers can claim about $9,600 per employee in tax credits per year under the WOTC program. Additionally, there is no set limit to the number of individuals an employer can hire in order to claim the tax credit.
How Does It Work?
The tax credit employers can claim is dependent on a few factors:
- The specific target group of the individual hired
- The wages paid to that individual during his or her first year of employment
- The number of hours the individual has worked in first year of employment
There is also a maximum tax credit that can be earned. For specific information regarding this, please click here.
Who Can I Hire?
Employers can hire from the following target groups:
- Veterans
- TANF recipients
- SNAP (food stamp) recipients
- Designated Community Residents (living in Empowerment Zones or Rural Renewal Counties)
- Vocational Rehabilitation Referrals
- Ex-felons
- Summer Youth Employee
- Supplemental Nutrition Assistance Program (SNAP) Recipient
- Supplemental Security Income (SSI) Recipient
- Long-Term Family Assistance Recipient
- Qualified Long-Term Unemployment Recipient
How Are Tax Credits Calculated?
Generally, an employer can earn a tax credit equal to 25% or 40% of a new employee’s first-year wages, up to the maximum for the target group to which the employee belongs. Employers can earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours.
How Do I Enroll?
Enroll in Employer Services Online.
- Visit the Employer Services Online page to enroll for a username and password.
- Enroll in eWOTC.
- Submit an application.
You may submit single or multiple applications by clicking the corresponding link under the Manage Applications section.
Once the appropriate forms are submitted, the application will be reviewed for eligibility.
Infinium HR can assist ith setting up a hiring process that includes the WOTC screening.