Work Opportunity Tax Credit (WOTC)

Work Opportunity Tax Credit (WOTC)

One overlooked federal tax credit that many companies miss is the  Work Opportunity Tax Credit. The WOTC is designed to reward employers who hire individuals from certain target groups, including former military, people living in low income areas, and people who have been unemployed six of the previous twelve months.

Generally speaking, you’re eligible for credits if your new hires start at $20 per hour. For companies that routinely hire from target groups (such as unemployed and/or disabled veterans, long term unemployed individuals, food stamp (SNAP) recipients, ex-felons, summer youth and others), the total incentive can range from $1,200 to $9,600 depending on the employee.

Why Don’t More Employers Get This Tax Credit?

Without a system put in place by a firm with WOTC expertise, most employers find it very cumbersome and frustrating to claim WOTC credits in the narrow window of eligibility the government gives the employer. If the employer cannot successfully apply for each new hire’s eligibility in the short four week window after the new hire date, the credit is forfeited and cannot be claimed retroactively at a later date. Companies that engage outside expertise however, are reaping the benefits!

  1. We’ve been IGNORING this tax credit altogether and overpaying the IRS.
  2. We’ve attempted to do it INTERNALLY, and might be missing credits.
  3. We use outside EXPERTISE and receive all credits we’re eligible for.



WOTC Program Reauthorization

The WOTC Program was extended and modified by President Obama on December 18, 2015, with a law called the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act)

According to the United States Department of Labor, the PATH Act:

  • Retroactively reauthorizes the WOTC program target groups for a five-year period, from December 31, 2014 to December 31, 2019.
  • Extends the Empowerment Zones for a two-year period, from December 31, 2014 to December 31, 2016.
  • Introduces a new target group, Qualified Long-term Unemployment Recipients, for new hires that begin to work for an employer on or after January 1, 2016 through December 31, 2019.

How are the Tax Credits Calculated?

Employers can earn a tax credit equal to 25% if the employee works at least 120 hours, and 40% if the employee works at least 400 hours, of the employee’s first-year wages.  They can receive up to the maximum for the target group to which the employee belongs.

Get the Credits You Are Entitled to!

There is no reason your company should not receive the tax credits available for doing what you are already doing.  To avoid unnecessary frustration and the risk of missing out on your credits because of late filings, visit

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