The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to all private sector businesses as an incentive to employers to hire workers in certain groups who consistently experience high rates of unemployment. The Work Opportunity Tax Credit reduces an employer’s cost of doing business and requires little paperwork.
The tax credit allows employers to reduce their federal tax liability by up to $9,000 per new hire. For-profit businesses of any size qualify. And the tax credit applies to temporary, seasonal, part-time and full-time workers. The tax credit is available for new hires with job start dates through December 31, 2011.
The WOTC applies only to new employees who have never worked for the hiring employer at any other time.
- Any size for-profit employer may apply for the WOTC.
- No limit to the number of new hires an employer may claim for the WOTC in any calendar year.
- No relatives or dependents or majority business owners qualify as WOTC hires.
- Self-employed individuals do not qualify as WOTC hires.
- Temporary, seasonal, part-time and full-time work applies.
- Any type of job is acceptable.
- There is no limit to the number of new hires that can qualify an employer for the WOTC in any calendar year and the amount of tax credit an employer can accrue.
- If your company is not profitable this year, the credits are good for up to 3 years from the due date of your return.
Certification of the Employee
An employer must request and receive certification from its state workforce agency (SWA) that the new hire is a member of one of the WOTC target groups before the employer can claim the WOTC on its federal income tax return. To request certification, the employer must:
- Complete page 1 of IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, by the date of the job offer and page 2 of IRS Form 8850 after the individual is hired; and
- Complete one of the following one-page U.S. Department of Labor forms, as appropriate:
- ETA Form 9061, Individual Characteristics Form, if the new hire has not been given a conditional certification, ETA Form 9062, or
- ETA Form 9062, Conditional Certification Form, if provided to the job seeker by a participating agency, such as a vocational rehabilitation agency, an employment network, or a SWA; and Mail the signed/dated IRS and ETA forms to the state workforce agency’s WOTC Coordinator not later than 28 days after the new hire begins work.
To learn more about the WOTC, call your State WOTC Coordinator, visit the WOTC website or call your local employment or state workforce agency. To find the State WOTC Coordinators, click here.
National Coordinator
Carmen Ortiz
Washington, D.C.
202-693-2786
ortiz.carmen@dol.gov
Submitted By:
Jean Austin, SPHR
Manager of HR Services
Payroll Control Systems
Office: 763-746-1942
Cell: 612-770-6187
jaustin@pcspayroll.com
www.pcspayroll.com
Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.
