One of the most popular government incentives for employers in the United States is the Work Opportunity Tax Credit (WOTC), a federal non-refundable tax credit for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.
How Does WOTC Work?
Employers must obtain certification that the individual they wish to hire is a member of a targeted group before claiming the credit by filing Form 8850 with their respective state workforce agency. Forms must be submitted within 28 days after the eligible worker begins work.
What Are the Targeted Groups?
- Qualified IV-A Recipient
- Qualified Veteran
- Designated Community Resident (DCR)
- Vocational Rehabilitation Referral
- Summer Youth Employee
- Supplemental Nutrition Assistance Program (SNAP) Recipient
- Supplemental Security Income (SSI) Recipient
- Long-Term Family Assistance Recipient
- Qualified Long-Term Unemployment Recipient
What is the Maximum Amount An Employer Can Receive?
Employers can claim up to $9,600 per employee per year, depending on their target group. There is no set limit to the number of individuals for which an employer can claim this credit. The employee must work at least 120 hours to be eligible.
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