Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit that is designed to help employers hire and retain employees who may face significant barriers to employment. It is intended to provide a financial incentive for employers to hire and retain individuals from these targeted groups, as well as to provide job training and employment opportunities for these individuals.
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Frequently asked questions
Who is eligible for the WOTC?

The WOTC is available to employers who hire individuals from certain targeted groups, including:

  • Veterans
  • Ex-felons
  • Temporary Assistance for Needy Families (TANF) recipients
  • Supplemental Nutrition Assistance Program (SNAP) recipients
  • Long-term unemployed individuals
  • Summer youth employees
  • Supplemental Security Income (SSI) recipients
  • Designated community residents
  • Vocational rehabilitation referrals
  • Ex-service members
How can I claim the WOTC?

To claim the WOTC, employers must complete Form 8850, "Pre-Screening Notice and Certification Request for the Work Opportunity Credit," and submit it to their state workforce agency within 28 days of the employee's start date. The state agency will then determine the employee's eligibility and issue a certification if the employee is eligible. The employer can then claim the credit on their federal tax return.

What is the maximum WOTC credit an employer can claim?

The maximum WOTC credit an employer can claim varies depending on the targeted group of the employee. For example, the maximum credit for hiring a veteran who is unemployed for at least six months is 40% of the first-year wages paid to the employee, up to a maximum of $6,000. The maximum credit for hiring a TANF recipient is 40% of the first-year wages paid to the employee, up to a maximum of $2,400.

Is the WOTC a refundable credit?

No, the WOTC is not a refundable credit. This means that the credit can only be used to offset the employer's federal tax liability, and any excess credit cannot be refunded to the employer.

How long is the WOTC available?

The WOTC is available for a limited time and is generally authorized by Congress on a year-by-year basis. The current authorization for the WOTC expires on December 31, 2025.

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