Work Opportunity Tax Credit
What is it?
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups, including Veterans, who have consistently faced significant barriers to employment. In this case, hiring a Veteran will have a lower after-tax cost compared to hiring a non-WOTC eligible employee.
To claim the WOTC, an employer must have the employee certified as eligible by the appropriate state workforce agency. To do this, the employer submits a form to the state agency within 28 days of hiring the WOTC-eligible worker. The state agency determines that the individual meets the requirements and certifies the application. The employer may claim the credit as part of the General Business Credit. These credits can be carried back one tax year or carried forward up to 20 tax years.
How Do You Apply?
An eligible group member obtains a conditional certification (ETA Form 9062) from a participating state or local agency. The jobseeker then uses it to market himself or herself to an employer. The employer completes a prescreening/certification request (IRS Form 8850) by the date a job offer is made and mails both the IRS and ETA forms to the state’s WOTC coordinator within 28 days after the new hire starts working.
An employer completes IRS Form 8850 by the date a job offer is made to an applicant believed to belong to the WOTC population. The employer also completes the individual characteristics information (ETA Form 9061). The IRS and ETA forms must be mailed to the state’s WOTC coordinator within 28 days after the new hire starts working.