Work Opportunity Tax Credits (WOTC)

What is a WOTC?

The Work Opportunity Tax Credit, also known as WOTC, is a federally funded tax credit designed to encourage business owners to hire and retain Veterans and individuals from specific target groups.  The WOTC is a nonrefundable tax credit that can only be used to offset federal tax liability.  The tax claim is dependent on the target group that the individual employee falls under, the number of hours the employee works, as well as the amount of wages that the employee earns.

What Types of Businesses Qualify for WOTC?

Any business can qualify for the Work Opportunity Tax Credit program.  There are no restrictions on company size or type.  The WOTC depends on the types of employees that are hired.  The types of employees that help companies get these types of tax credits are

  • Veterans
  • Individuals in the SNAPS (Food Stamp_Program
  • Ex-Felons
  • Individuals who are TANF Recipients
  • Individuals who live in a Rural Renewal County
  • Individuals who live in an Empowerment Zone
  • Individuals that receive Supplemental Security Income
  • Summer Youth Employee that lives in an Empowerment Zone

The Benefits and limitations of WOTC

Benefits

  1. Any business can qualify for it.
  2. The Work Opportunity Tax Credit can carry over into the next year for up to 15 years.

Limitations

  1. Any unused credits cannot be applied to previous years.
  2. These tax credits cannot be amended.

How much can companies expect from WOTC?

  • Up to $2,400 for qualified adult new hires
  • Up to $1,200 for qualified summer youth hires
  • Up to $4,800 for each disabled veteran new hire
  • Up to $9,600 for long-term family assistance (SNAPS or TANF recipients) hired for at least 2 years
  • Up to $2,400 for an Ex-Felon
  • Up to $2,400 for a Vocational Rehabilitation Referral
  • Up to $2,400 for a person receiving Supplemental Security Income

For more information on the qualifications associated with the WOTC, please contact one of our tax credit specialist for a free, no risk, no obligation consultation today.