What are the Work Opportunity Tax Credit (WOTC) Program target groups?
- Veterans (low income, disabled and/or unemployed)
- Long-term Family Assistance Recipients of Temporary Assistance for Needy Families (TANF);
- Short Term Recipients of TANF
- Supplemental Nutritional Assistance Program (SNAP) Benefits Recipients 18–39 years old;
- Designated Community Residents 18-39 years old;
- Vocational Rehabilitation Referrals;
- Supplemental Security Income (SSI) Recipients;
- Summer Youth Employees Living in Empowerment Zones
- Long Term Unemployment Recipient
What is the definition of a “Veteran”?
For the purposes of WOTC, a Veteran is an individual who:
- Served on active duty for a period of more than 180 days in the Armed Forces of the United States, or
- Was discharged from active duty for a service-connected disability, and
- Did not have any day during the 60-day period prior to the hiring date which was a day of “extended active duty” in the Armed Forces of the United States.
Note: Other requirements may also apply for WOTC Certification.
Do employees have to work full-time for an employer to be eligible for the WOTC?
No. The WOTC is available to businesses that employ both full-time and part-time employees.
How do unemployed workers benefit from WOTC?
Businesses may reduce their tax liabilities significantly by participating in the WOTC program. By reducing costs, businesses may find it possible to hire much needed staff, resulting in the creation of new jobs.
If an unemployed worker believes they might belong to one or more target groups, this could be an added selling point if shared with potential employers. Job seekers may choose to add information related to WOTC to their resume or work applications. By encouraging employers to take a look at an applicant’s eligibility, it lets the employer know that you care about their profitability and costs related to hiring new employees. Expressing an interest in saving the business money might prove to have a positive influence during the process of selecting a new employee.
How do businesses benefit from WOTC?
The WOTC Program provides businesses with substantial tax savings for each new hire belonging to one of targeted groups seeking employment.
The WOTC is a credit against an employer’s federal tax liabilities of up to $9,600 per employee for businesses that employ members from one of the targeted groups. The amount of the actual credit depends on several factors, including: target group, hours worked, and the wages earned in the employer’s business.
Businesses are allowed to make all hiring decisions. Only a minimal amount of paperwork is required to file for the tax credit. For every new hire member of a target group, a WOTC application can be submitted, regardless of the number of qualified target group members a business may hire.
What factors may disqualify someone for the WOTC?
- If the employee did not work for the business at least 120 hours;
- If the employee worked for the business previously;
- If the employee is a dependent of the employer; or
- If the employee is related to the employer.