Work Opportunity Tax Credit

Overview

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit available to employers that hire individuals from targeted groups that have traditionally faced barriers to employment. Congress has recently expanded this program by introducing new target groups and increasing the amount of the credit. The following target groups are eligible for the WOTC program:

• Temporary Assistance to Needy Families (TANF) recipient
• Food Stamp recipient
• Social Security recipient
• Qualified veteran
• Designated Community resident
• Summer Youth employee
• Vocational rehabilitation referral
• Qualified ex-felon

The WOTC benefit claimed by an employer is determined by the hours worked and the employee’s WOTC target group. It is a federal income tax credit applied against a taxpayer’s income tax liability. New employees must be retained a minimum of 120 hours and may generate up to $9,600 in credits.

FCG

Claiming WOTC presents unique challenges as new hires must sign the required forms on the date they are offered employment. Those forms must then be submitted within 28 days of date of hire in order to obtain certification. Our applicant-screening process includes the following to maximize compliance and qualification:

• Provide new hire questionnaire and IRS forms
• Review completed forms
• Enter form data into our tracking system
• Obtain necessary documentation
• Forward appropriate forms to state workforce agency (SWA)
• Track and obtain certifications
• Monitor wages and hours worked
• Calculate credit
• Deliver report
• Assist with preparation of returns
• Provide audit support (as needed)