Work Opportunity Tax Credit
- Nov 4, 2024
What Is the WOTC?
The Work Opportunity Tax Credit (WOTC) is a federal tax credit offered by the IRS to incentivize employers to hire individuals from specific targeted groups facing barriers to employment. It’s a win-win: employers gain valuable team members, while at-risk employees find opportunities to enter the workforce.
This program also aligns with workforce initiatives to promote workplace diversity and expand job opportunities for American workers.
Who Qualifies for the WOTC?
Employers can claim the WOTC when they hire individuals certified as members of targeted groups. These groups include, but are not limited to:
- Veterans
- Long-term unemployed individuals
- Individuals receiving government assistance
Visit the IRS website for a full list of qualifying groups.
How Much Is the Tax Credit Worth?
The WOTC is calculated as 40% of up to $6,000 in wages paid to an employee who:
- Is in their first year of employment
- Belongs to a certified targeted group
- Performs at least 400 hours of service for the employer
The maximum tax credit is typically $2,400 per eligible employee, making this a great way for employers to reduce tax liability while supporting workforce diversity.
How to Claim the WOTC
The IRS and the Department of Labor jointly administer the WOTC. Employers must request certification by filing IRS Form 8850 and submitting it to the appropriate state workforce agency within 28 days of the employee’s start date.
Why Use the WOTC?
- Support Diversity: Build a diverse and inclusive workplace.
- Tax Savings: Reduce your tax liability while hiring valuable team members.
- Economic Impact: Help individuals who face significant barriers to employment.
Learn More
For detailed instructions and eligibility requirements, visit the IRS WOTC page.
At Adams Tax Services, we’re here to help you make the most of tax opportunities like the WOTC—because taxes shouldn’t be taxing.
