The Work Opportunity Tax Credit can help small business lower their tax liability when they hire new employees from a target groups of workers
WOTC Program Details
- The credit is equal to a percentage of targeted worker’s wages
- WOTC encourages employers to hire from targeted groups
- Employees must work at least a minimum of 120 hours for a company to receive credit
- WOTC credit is generally $2,400 per employee (40% of the first $6,000) over the first year employment. However, the Veterans with a service-connected disability does allow for maximum credit of $9,600
- Credit applies to only newly hired employees
- Credit can be applied to federal income tax or alternative Minimum Tax. Also, Qualified tax-exempt organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), (Non-profit corporations) can use the credit again their social security tax owed. Before you can take the credit. You need to get Pre-screen and Certified the individuals within 28 days of the start date and send form 8850 to the Department of Labor for certification. So, the employer must obtain information that the individual is a member of the target group. WOTC Qualification Categories Target Groups the new employee must belong to one of the following (14) WOTC target groups:
THE QUALIFICATION CATEGORIES
Veteran Target Groups: Max Credit
- Veterans with a service-connected disability who have been unemployed for at least 6 months in the past year $9,600
- Veterans with a service-connected disability and hire within 1 year of their discharge/release date $4,800
- Veterans who have been unemployed for at least 6 months $5,600
- Veterans receiving Supplemental Nutrition Assistance Program(SNAP) benefits $2,400
- Veteran who have been unemployed for at least 4 weeks but less than 6 month $2,400
Non-Veteran Target Groups:
SNAP recipients——————————————————————-$2,400
Temporary Assistance for Needy Families recipients————————-$2,400
Long-Term Family Assistance recipients who are
Members of a family that has received TANF
Benefits for at least 18 consecutive month——————————————$9,000
Supplemental Security income recipient——————————————–$2,400
Vocational Rehabilitation Referrals————————————————-$2,400
Ex-felons——————————————————————————–$2,400
Designated Community Resident—————————————————–$2,400
Long-term unemployed (27Wks.) —————————————————–$2,400
Summer Youth program participants who are 16 to 17 years old
Work between May 1 and September 15 and live in
Designated community area————————————————————-$1,200