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Work Opportunity Tax Credit - for employers

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive that Congress provides to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The main objective of this program is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are compensated by being able to reduce their federal income tax liability. WOTC joins other workforce programs that help incentivize workplace diversity and facilitate access to good jobs for American workers.

On November 21, 2011, President Obama signed into law the Vow to Hire Heroes Act of 2011, which amends and expands the definition of WOTC's Veteran target groups. For information on the new changes and provisions click, open and print any or all of the following documents:

  • Summary of WOTC provisions in the Vow to Hire Heroes Act
  • Interim instructions for state workforce agencies and employers
  • IRS Notice 2012-13 on VOW Act Provisions

The legislative authority for the WOTC program's non-veteran groups expired on December 31, 2011. Given that the non-veteran groups may be reauthorized based on legislative history for WOTC, employers may still submit certification requests to State Workforce Agencies (SWAs) for these groups. SWAs will accept but not issue final determinations until WOTC is reauthorized.

  • TEGL No. 15-11- Provides Guidance for states on authorization lapse for non-veteran target groups

    WOTC's Outreach Toolkit provides the following publications with a plain-English overview of the program:

    • WOTC Program Fact Sheet
    • WOTC Veterans' Brochure for Employers
    • WOTC Program Brochure for Employers
    • Directories of Regional and State WOTC Coordinators

      • The 3rd., Edition of ETA Handbook No. 408 for the WOTC Program, published on November 2002 and its August 2009 Addendum, provide additional information on this program:

    • ETA Handbook 408, 3rd., Ed., November 2002
    • ETA Handbook 408, 3rd., Ed., August 2009 Addendum

http://www.doleta.gov/business/Incentives/opptax/

WOTC Eligible New Hires

Veteran Target Group

The VOW to Hire Heroes Act of 2011 Expanded and Extended the Qualified Veteran Group.To be eligible under the current WOTC program, a veteran must have begun to work for an employer on or after November 22, 2011 and before January 1, 2013.

  1. Qualified Veteran.A veteran who is:
    • a member of a family that received SNAP benefits (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date; or
    • entitled to compensation for a service-connected disability and who is hired within one year of discharge or release from active duty in the U.S. Armed Forces, or
    • entitled to compensation for a service-connected disability and unemployed for a period or periods totaling at least 6 months of the year ending on the hiring date.
      New Unemployed Categories:
    • unemployed for at least 4 weeks, but less than 6 months,
    • unemployed for at least 6 months

    2. For additional information on the increased tax credits for hiring veterans, see the VOW to Hire Heroes Act Fact Sheet.


    Other Target Groups

    The legislative authority for the WOTC program's non-veteran groups expired on December 31, 2011. Given that the non-veteran groups may be reauthorized based on legislative history for WOTC, employers may still submit certification requests for these groups to states. States will accept and may process requests but not issue determinations until WOTC is reauthorized. If extended by Congress, for an employee to be certified as an eligible group member by a State Workforce Agency, the new hire must belong to one of the following target groups:

  1. Long-term TANF Recipient.A member of a family that:
    • Received Temporary Assistance to Needy Families (TANF) payments for at least 18 consecutive months ending on the hiring date, or
    • Received TANF payments for any 18 months (whether or not consecutive) beginning after August 5, 1997, and has a hiring date that is not more than two years after the end of the earliest 18-month period after August 5, 1997, or
    • Stopped being eligible for TANF payments during the past 2 years because a federal or state law limited the maximum time those payments could be made.
  2. Short-term TANF Recipient.A member of a family that received TANF benefits for any 9-month period during the 18-month period ending on the hiring date.
  3. Supplemental Nutrition Assistance Program (SNAP) Recipient.An 18-39 year old member of a family that received SNAP benefits for the 6 months ending on the hiring date, or received SNAP benefits for at least 3 of the 5 months ending on the hiring date.
  4. Designated Community Resident.An 18-39 year old who lives within one of the federally designated Rural Renewal Counties.

    Note:HUD's urban and USDA's rural designated EZs expired on December 31, 2011. The Summer Youth group is no longer a target group.

  5. Vocational Rehabilitation Referral.An individual with a disability who completed or is completing rehabilitative services from a State certified agency, an Employment Network under the Ticket to Work program, or theU.S. Department of Veterans Affairs.
  6. Ex-Felon. An individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison.
  7. SSI Recipient.A recipient of Supplemental Security Income (SSI)benefits for any month ending during the past 60-day period ending on the hire date.

    8. Minimum Employment or Retention Period,In addition to belonging to one of the 8 groups outlined above, all new adult employees must work a minimum of 120 hours for the employer to qualify to claim the WOTC.

    Ineligible Populations,The following individuals or groups of individuals do not qualify for the WOTC, even if they meet the other eligibility criteria:

  • Employer's relatives and dependents;
  • Majority owners of the employer; and
  • Former employees.

http://www.doleta.gov