The Work Opportunity Tax Credit (WOTC) provides tax credits to employers who hire workers from certain target groups that face barriers to employment. Credits range from $2,400 to $9,600 per qualifying employee depending on the target group and hours worked. The administrative burden is modest; the tax benefit can be substantial.
Who Qualifies as a WOTC Hire
Target groups include SNAP recipients, recipients of SSI or TANF, qualified ex-felons, veterans with service-related disabilities, vocational rehabilitation referrals, summer youth employees in empowerment zones, long-term family assistance recipients, and qualified long-term unemployment recipients. Employees do not always know they belong to a target group—the certification process through your state workforce agency handles verification.
How to Claim the Credit
The employer must submit IRS Form 8850 to the state workforce agency within 28 days of the employee's start date. The state agency then issues a certification. The credit is claimed on Form 5884. The certification window is strict—miss the 28-day deadline and the employee is permanently ineligible for WOTC.
Key Takeaways
- Credits range from $2,400 to $9,600 per qualifying hire.
- Form 8850 must be submitted to your state workforce agency within 28 days of the hire—no exceptions.
- WOTC screening should be part of your standard onboarding process for every new hire.
