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Services angle Tax Services angle Federal Work Opportunity Tax Credit (WOTC)

Federal Work Opportunity Tax Credit (WOTC)

As an employer, you may be hiring qualified workers and don’t realize it. The Work Opportunity Tax Credit (WOTC) program is a federal government initiative designed to increase employment opportunities for people who typically experience certain barriers to employment.

We work collaboratively with an external partner to review your hiring practices and determine the credit amount for each qualified new hire.

WOTC Details

How much businesses can save

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.

When to claim the credit

  • 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.

How to claim the credit

  • The 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.

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