Taking Advantage of the Work Opportunity Tax Credit


HM2015_DBBy: Chandra Reau, Staff Accountant 

The Work Opportunity Tax Credit (WOTC) was resurrected last year when the president signed the Protecting Americans from Tax Hikes (PATH). This credit is available to those who employ workers from a number of target groups.  Are you aware of the rules for employers so you may take advantage of this credit?

The WOTC credit is retroactive to the beginning of 2015, and the new rules give employers through June 29, 2016 to take the steps required to claim the credit.

The target groups for hiring in order to be eligible for the credit include:

  • Unemployed Veterans (including disabled veterans)
  • Temporary Assistance for Needy Families (TANF) Recipients
  • Food Stamp (SNAP) Recipients
  • Vocational Rehabilitation Referred Individuals
  • Ex-Felons
  • Supplemental Security Income Recipients
  • Summer Youth Employees (living in Empowerment Zones)
  • Designated Community Residents (living in Empowerment Zones or Rural Renewal Counties)

The current credit per employee could be worth up a maximum credit of $1,500- if the employee works at least 10 hours; the next tier could be worth up to $2,400 if the employee works at least 400 hours.  Certain target groups, like a veteran with a service-related disability, have special rules when it comes to the credit amount that is offered. Employing someone from this target group could entitle an employer to a credit of up to $9,600.

Employers must provide certification that an individual is a member of a target group in order to claim the WOTC credit. This can be done by filing Form 8850 (Pre-Screening Notice and Certification Request for Work Opportunity Credit) with the Department of Labor. This form should be filed within 28 days when the eligible employee begins working on the job but employers have been granted more time to meet the filing requirements. Employers also must submit (ETA) Form 9061 (Individual Characteristics Form) or 9062 (Conditional Certification) to the Department of Labor.

Don’t let the numbers and forms involved keep you from exploring how you can take advantage of a WOTC credit. Contact us for assistance and we would be happy to help you obtain the credits you are entitled to.

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