Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from eligible target groups with significant barriers to employment.

Why WOTC?

Employers Make the Hiring Decisions:

WOTC helps those in need find and retain good jobs, while reducing an employer’s cost of doing business.

The US Economy Benefits:

The success and growth of this income tax credit is beneficial for all who participate, while increasing America’s economic growth and productivity.

How does WOTC work?

The tax credit is available to certain tax-exempt organisations that hire new employees from the WOTC veterans target group.

Are you eligible? Let’s find out:

• • Long term or short term temporary assistance for needy families recipients.
  • Supplemental nutrition assistance program recipients(food stamps)
  • Designated community resident
  • Vocational rehabilitation referral
  • Ex-felon
  • Supplemental security income recipient
  • Summer youth employee

If yes, follow the instructions below:

Complete IRS Form 8850—-> Complete ETA Forms 9061——->ETA Form 9175——>Submit completed Forms to your State Workforce Agency——> Receive Final Determination——->File for the Credit with the IRS

Step 1:
New hires must fill out the IRS Form 8850, Pre- Screening Notice and Certification Request for the Work Opportunity Credit, to pre-screen employees, and make a written request to their SWA to certify them as a member of a WOTC target group.

Form 8850

Step 2:
Next, you have to complete a U.S. Department of Labour WOTC Form, ETA 9061, the individual characteristics form.

Form 9061

Step 3 :
New hires are encouraged to provide a supporting documentation of eligibility for a WOTC target group, if available.

Form 9175

Step 4:
We will submit your completed IRS, ETA and Supporting Forms to the State specific Workforce Agency within the 28 calendar days after the employee’s start date.

Step 5:
The SWA will issue a final determination for each WOTC application. This process can take upto a year.

When a certification is received, your CPA will be able to use it

A blog by – Divya Jyoti
Manager – Human Resource’s

Divya calls herself a Human Resource’s Consultant and “all around a curious person” as well as blogger of HR Observations and speaker. Her 5 years of experience are an excellent resource for a growing business. She is a proud HR Generalist(though she does focus on employment compliance and consultant care)