The Work Opportunity Tax Credit (WOTC) Can Work for YOU!

[dropcap]Take [/dropcap]advantage of the Work Opportunity Tax Credit (WOTC)!   This Federal Tax Credit program provides tax credits to employers that hire individuals from target groups.  The tax credit could save your business up to $9,600 per target group employee!  The target groups include Veterans, TANF recipients, SNAP recipients and others – see the target group requirements on the official website.  

The tax credit is available when your target group employee works at least 120 hours, and increases in size as your employee works more hours.  A real example: If you hire 10 target group caregivers this year and they each earned $10 per hour for 120 hours, your company would qualify for a tax credit of $3,000.  Keep in mind that this is a tax credit, not a tax deduction.  Tax credits are dollars in your pocket, while tax deductions simply reduce your taxable income.  If your target group caregivers work 400 hours each, your tax credit increases to $16,000!  The U.S. Department of Labor provided a handy Excel Spreadsheet for calculating your benefit.

Which employees qualify for the WOTC (the Target Groups)?

• Veterans
• TANF Recipients
• SNAP (Food Stamp) Recipients
• Designated Community Residents (living in an Empowerment Zone or Rural Renewal County)
• Vocational Rehabilitation Referral
• Ex-felons
• Supplemental Security Income Recipients
• Summer Youth Employee (living in an Empowerment Zone).

Specific requirements for each target group are listed on the U.S.  Department of Labor target group eligibility website.

What is the process for obtaining the tax credit?

Employers should complete the following steps to apply for certification to receive the WOTC:

1. Complete IRS Form 8850 by the day the job offer is made.
2. Complete ETA Form 9061, or ETA Form 9062 if the employee has been conditionally certified as belonging to a WOTC target group by a state workforce agency, Vocational Rehabilitation agency, or another participating agency.
3. ETA Form 9175: For new WOTC target group, Long-Term Unemployment Recipients, complete Long-Term Unemployment Recipient Self-Attestation Form when there is an absence of UI wage records (see TEGL 25-15).
4. Submit the completed and signed IRS and ETA forms to your state workforce agency . Forms must be submitted within 28 calendar days of the employee’s start date.
5. States may accept applications via mail, fax, or e-mail or may have an automated WOTC process that accepts electronic submissions. If you are not sure how your state accepts applications, contact your state WOTC coordinator, or view our chart on state submission processes.

This tax benefit has proven very lucrative for Home Care Businesses that hire caregivers from the targeted groups.  The WOTC provides an excellent means for Employers to reduce their hiring expenses while providing valuable jobs invaluable care.

For more information contact your tax professional and / or your local IRS office.  Additional details may also be found at:  U.S. Department of Labor: WOTC Home,  Texas Workforce Commission: WOTC Home