What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

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What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

To be eligible, candidates must begin work on or after the date specified by the legislation authorizing the WOTC program. The credit generally ranges from $2,400 to $9,600, depending on the target group.

Employers can claim the credit as a general business tax credit against their federal income tax liability.

How Does the Work Opportunity Tax Credit Work?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire and retain individuals from certain target groups that have consistently faced significant barriers to employment.

To be eligible, employers must first obtain certification from their state workforce agency that the new hire is a member of a target group. Once the individual has been employed for at least 120 hours, the employer may claim the credit on their federal tax return.

The credit is generally equal to a percentage of the wages paid to the employee during their first year of employment, and is based on the number of hours worked. The maximum credit is $2,400 per employee.

Target groups for the WOTC include:
-Veterans
-Individuals with disabilities
-Individuals from disadvantaged backgrounds

Who is Eligible for the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

To be eligible, candidates must generally begin work before January 1, 2020. Employers can claim the credit for qualified wages paid to eligible workers during the first year of employment, and in some cases, for a second year.

To be considered a qualified worker, an individual must:
-Be a member of a target group that has consistently faced significant barriers to employment
-Be hired by the employer after December 31, 2019
-Work at least 120 hours for the employer during their first year of employment

How Do I Claim the Work Opportunity Tax Credit?

To claim the Work Opportunity Tax Credit, you must complete IRS Form 5884 and submit it to your employer. Your employer will then claim the credit on their corporate tax return.

There are two ways to claim the Work Opportunity Tax Credit:

The first way is to complete IRS Form 5884 and submit it to your employer. Your employer will then claim the credit on their corporate tax return.

The second way is to file IRS Form 3800 with your personal tax return. You will need to include documentation from your employer verifying that you are eligible for the credit.

What are the Benefits of the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

The WOTC target groups include:
-Individuals who are receiving food stamps (SNAP benefits)
-Veterans who are unemployed, underemployed, or have service-connected disabilities
-Ex-felons
-Individuals with disabilities
-Summer youth employees ages 16-17 from low-income families
-Long-term unemployed individuals ages 18+