Within one year upon hire of an Ex-Felon, you the employer qualify for the Work Opportunity Tax Credit (WOTC).

The consolidated WOTC for hiring most target group members can now be as much as:

  • $2,400 for each new adult hire;
  • $1,200 for each new summer youth hire,
  • $4,800 for each new disabled veteran hire, and
  • $9,000 for each new long-term family assistance recipient hired over a two-year period.

Minimum employment or retention period. All new adult employees must work a minimum of 120 or 400 hours. Individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, before an employer is eligible to claim the tax credit. The WOTC amount an employer may claim depends on the hours the employee works. The credit is 25% of qualified first-year wages for those employed at least 120 hours but fewer than 400 hours and 40% for those employed 400 hours or more.

HOW CAN EMPLOYERS PARTICIPATE IN THE WOTC?

To receive certification that a new employee qualifies the employer for this tax credit, the employer must:

  1. Complete page one of IRS Form 8850 by the day the job offer is made.
  2. Complete page 2 of IRS form 8850 after the individual is hired.
  3. Complete either the one page ETA Form 9061 or Form 9062 as appropriate. For example:
    • If the new employee has already been conditionally certified as belonging to a WOTC target group by a state workforce agency (SWA) or participating agency, complete the bottom part of ETA Form 9062, sign and date it, or
    • If the new employee has not been conditionally certified, the employer and the new employee must complete, sign and date ETA Form 9061.
  4. Mail the completed and signed IRS and ETA forms to the employer’s state workforce agency within 28 days after the employee’s employment-start date for all individuals who begin work for an employer on or after January 1, 2007. (To find the address of the SWA in your state consult the Directory of State Coordinators below).

Employer Guide – Work Opportunity Tax Credit

Individual Characteristics Form – Work Opportunity Tax Credit

Instructions for Form 8850

Pre-Screening Notice and Certification Request for the Work Opportunity

Work Opportunity Tax Credit Employer Brochure

Work Opportunity Tax Credit Information Sheet

Credit (IRS 8850)

Use form to report WOTC credit with tax return

Work Opportunity Tax Credit Target Group Definitions Guide Card

Click here for directories of the State and Regional Coordinators.

Some other information regarding the Work Opportunity Tax Credit (WOTC)

An employer may qualify for a tax credit of up to $9,000 if the employee is a member of a designated target group and meets that group’s specific requirements.

Target Groups that Qualify for the WOTC — Individuals hired from the following nine target groups may qualify an employer for the WOTC:

  1. Qualified recipients of Temporary Assistance to Needy Families (TANF).
  2. Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability who:
    • Have a hiring date which is not more than one year after having been discharged or released from active duty OR
    • Have aggregate periods of unemployment during the one year period ending on the hiring date that equal or exceed six months.
  3. Ex-felons hired no later than one year after conviction or release from prison.
  4. Designated Community Resident – an individual who has attained ages 18 but not 40 on the hiring date who reside in an Empowerment Zone, Renewal Community, or Rural Renewal County.
  5. Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network.
  6. Qualified summer youth ages 16 through 17 who reside in an Empowerment Zone, Enterprise Community, or Renewal Community.
  7. Qualified Food Stamp recipients ages 18 but not 40 on the hiring date.
  8. Qualified recipients of Supplemental Security Income (SSI).
  9. Long-term family assistance recipients.