Already using an HR, ATS, or onboarding platform? CTI integrates with the solutions you know and trust, making it easy to embed WOTC screening directly into your recruiting and hiring workflows. Improve completion rates, simplify compliance, reduce administrative work, and maximize available tax credits, all without changing the tools your team relies on.
The work opportunity tax credit (WOTC) program is a federal government initiative designed to increase employment opportunities for people who qualify for the work opportunity tax credit. These are individuals who typically experience certain barriers to employment, such as veterans, public assistance recipients, or ex-felons.
The credit amount for WOTC can be up to $9,600 for each qualified new hire, depending upon the new hires’ WOTC target group. The credit is equal to a percentage of the eligible employee’s wages, and the employee must work at least 120 hours for the employer to receive credit.
The new employee must belong to one of the following WOTC target groups:
|
|
MAX CREDIT |
|---|---|
| Veterans with a service-connected disability who have been unemployed for at least 6 months in the past year | $9,600 |
| Veterans with a service-connected disability and hired within 1 year of their discharge/release date | $4,800 |
| Veterans who have been unemployed for at least 6 months | $5,600 |
| Veterans receiving Supplemental Nutrition Assistance Program (SNAP) benefits | $2,400 |
| Veterans who have been unemployed for at least 4 weeks but less than 6 months | $2,400 |
|
|
MAX CREDIT |
|---|---|
| Long-term unemployed | $2,400 |
| SNAP recipients | $2,400 |
| Temporary Assistance for Needy Families (TANF) recipients | $2,400 |
|
Long-Term Family Assistance recipients who are members of a family that has received TANF benefits for at |
$9,000 |
| Supplemental Security Income recipients | $2,400 |
| Vocational rehabilitation referrals | $2,400 |
| Ex-felons | $2,400 |
| Designated community residents | $2,400 |
| Summer Youth program participants who are 16 to 17 years old, work between May 1 and September 15, and live in a designated community area |
$1,200 |
Employers claim the tax credit against federal taxable income for the year that they “realize” the credit, that is, the year that the credit was awarded, not the year that the employee was hired.
WOTC is non-refundable, meaning the business must have a tax liability against which to use the credit.
Unused credit can be carried back one year and carried forward for 20 years.
Employee must complete IRS Form 8850 on or before starting the job.
Form 8850 must be postmarked within 28 days of start date and sent to the state Department of Labor for certification.
Many states offer hiring credits like the WOTC for job creation. We call these “piggyback credits” since we can capture the state credits simultaneously when screening for the WOTC.
Claiming ERC does not automatically subject a company to audit; however, some claims are likely to be reviewed. Understand who is at risk and what to do if you’ve already claimed.
Reach out to a tax consultant to learn how CTI powers your business for success.
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