The Work Opportunity Tax Credit (WOTC) is a Federal tax credit that's available to employers hiring from eligible target groups, made up of individuals with significant barriers to employment. Employers have the opportunity to earn a tax credit between $1,200 and $9,600 per employee.
A company's eligible employees must work 120 hours in the first year of employment to receive the tax credit.
Eligible groups include:
- Recipients of "Temporary Assistance for Needy Families"
- Food stamp recipients
- Designated community residents
- Ex felons
- Supplemental security income recipients
- Long-term unemployment recipients
- Summer youth employees
Adding the WOTC Eligibility Survey to Your Workpop Application Process
Adding this survey attachment to your application process allows you to easily collect Work Opportunity Tax Credit information for each applicant. You'll get everything needed to populate the IRS 8850 form as well as an estimate of the maximum credit each candidate would be eligible for so that you can use this information when making hiring decisions.
To add this step to your application, you can follow these steps:
From your My Jobs page
- Select the job you'd like to add the attachment to
- Select Screening Questions
- Use the toggle to turn the Work Opportunity Tax Credit Survey On
Applying for WOTC
Once this attachment has been added to your application process, all candidates will be prompted to complete a survey assessing their WOTC eligibility. On each application you'll see the maximum credit a candidate would be eligible for, as well as the information needed to populate the IRS Form 8850.
To complete a WOTC application for a new hire, you can follow these steps:
- Use the information provided in Workpop to complete IRS Form 8850 (Pre-Screening Notice Form)
- Page 1 of this form must be completed and signed by the new hire on or before the day the job offer is made
- Instructions on completing this form can be viewed here
- Complete the ETA Form 9061 or ETA Form 9062
- Form 9061 should be completed if the new hire does not present you with ETA Form 9062
- Employers submitting this form are encouraged to provide copies of documentation of eligibility for a WOTC target group, if available.
- Form 9062 may be presented to you by the new hire in some states, indicating the individual was tentatively determined as eligible for a WOTC target group
- You must hire the individual by the date indicated in Question 15 on this form, in order to be qualified for a tax credit.
- Review all forms for accuracy and completeness, and make copies for your records
- Submit the originals of Form 8850 and Form 9061/Form 9062 electronically or via mail to your State Workforce Agency.
- Mail all required forms and documents together.
- Form 8850 must be submitted electronically or postmarked within 28 days of the new hire's start date.
- Your State Workforce Agency will determine eligibility of the employee.
- After the employee is certified as eligible by the State Workforce Agency, file for the tax credit with the IRS.
- Generally, an employer elects to take the credit by filing IRS Form 5884 (Work Opportunity Credit).
- Alternatively, a tax-exempt organization that hires an employee in the Veteran target group should use IRS Form 5884-C (Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans).
The Department of Labor's WOTC Guide to Employers can be viewed here.