Everything You Need to Know About the Work Opportunity Tax Credit

Last Updated on April 29, 2019

What is the Work Opportunity Tax Credit (WOTC)?

The WOTC is a tax credit incentive offered by the government to incent employers to provide jobs to certain target groups, including U.S. Veterans.

A long-term extension of the Work Opportunity Tax Credit (WOTC) was signed into law on December 18, 2015, as part of a larger spending bill. In the past several years, Congress would extend the tax credits retroactively to the prior year. Now there is much more certainty for employers moving forward as they try to secure these credits and get target groups, like U.S. Veterans and the long-term unemployed, actively working.

The new law extends the Work Opportunity Tax Credit through 2019, and retroactively for 2015, giving employers an opportunity to get tax relief for 2015 hires, and through the remainder of the decade.

Which employers should use WOTC?

  1. Any employer who is typically profitable (credits can be carried forward), and who will be hiring employees (note this is being applied retrospectively to hires made back to January 1, 2015).
  2. Any income tax-paying retailer hiring employees should be taking advantage of WOTC.

Otherwise, they’re simply throwing away potential tax relief dollars. This program works for employees and employers alike.

What are the Target Groups?

  • Recipients of Temporary Assistance for Needy Families (TANF): A member of a family receiving TANF payments for any nine-month period during the 18 months prior to hire.
  • Veterans Receiving Food Stamps: A veteran who is a member of a family who has received food stamps for at least a 3-month period during the 15 months prior to hire.
  • Ex-felons: Economically disadvantaged individuals who have been convicted of a felony or released from prison in the 12 months prior to hire.
  • Designated community resident: An individual aged 18 through 39 residing in an empowerment zone or rural renewal county.
  • Vocational Rehabilitation Referrals: Individuals who are, or have been, clients of the rehabilitation services commission or the Department of Veterans’ Affairs.
  • Summer Youth: High-risk summer youth, ages 16-17, who are hired between May 1 and September 15, and live in a federal Enterprise Zone or Enterprise Community.
  • Food Stamp Recipients – Individuals between the ages of 18 through 40 who have received or reside in a family that has received food stamps for the previous 6-month period, or for at least 3 of the last 5 months.
  • SSI recipients – Individuals who are receiving Supplemental Security Income benefits for any month ending with the 60-day period ending on the hiring date.

How do I Participate?

If you hire one or more individuals from a target group, you must complete the corresponding forms (which can be found at https://www.doleta.gov/business/incentives/opptax/how-to-file/) and submit them within 28 days of the hire. Employing these individuals will be helping your community while also taking big chunks out of your tax liability.

FMS Solutions has offered a WOTC program for the past several years, and we are prepared to assist you in capturing future tax credits.

Article provided through FMS Solutions. Further information and resources available through:
Stan McClintock
VP, Sales
Direct: (402) 315-7363 
Toll Free: (877) 435-9400 Stan.McClintock@fmssolutions.com

Please reference MyHRConcierge for all inquiries.