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Employer's Guide: Work Opportunity Tax Credit

Are you an employer? The Work Opportunity Tax Credit (WOTC) is a federal tax credit for employers who hire people from certain target groups like veterans, former felons, youth, SNAP recipients, and more. You could receive a federal tax credit of up to $9,600.

You can authorize someone else, like an accountant or consultant, to manage the WOTC process for you. To do this, you must file an ETA Form 9198 Employer Representative Declaration. Please contact the WOTC office for more information on submitting this form. If you plan to manage the process yourself, follow the steps below.

Here's How It Works:

Step 1: Review the Target Groups

The WOTC applies to people from the following groups:

  1. Qualified Short-Term TANF Recipient: People who received Temporary Assistance to Needy Families (TANF) benefits for at least 9 months in the last 18 months.
  2. Qualified Veterans: Veterans who meet specific conditions, like receiving SNAP, having a service-related disability, or being unemployed for a period of time. To see the specific rules, review our WOTC webpage.
  3. Qualified Ex-Felon: People convicted of a felony who were hired within one year of release from prison.
  4. Qualified Designated Community Resident: People aged 18–39 living in a designated Empowerment Zone or Rural Renewal County.
  5. Qualified Vocational Rehabilitation Referral: People with a disability that creates a barrier to employment, hired within two years of receiving services.
  6. Qualified Summer Youth Employee: Youth aged 16–17 hired during the summer (May 1–Sept 15) in Empowerment Zones or Rural Renewal Counties.
  7. Qualified Food Stamp (SNAP) Recipient: People aged 18–39 who received SNAP benefits for six months.
  8. Qualified SSI Recipient: People receiving Supplemental Security Income (SSI).
  9. Qualified Long-Term Family Assistance Recipient: People who have received TANF for at least 18 months.
  10. Qualified Long-Term Unemployment Recipient: People unemployed for at least 27 weeks and receiving unemployment benefits.

To get more details on each of these target groups, carefully review our WOTC webpage.

Step 2: Confirm Employee Eligibility

To claim the WOTC, you must confirm the employee’s eligibility:

  1. Pre-Screening Notice: Ask the employee to complete a Pre-Screening Notice and Certification Request for the Work Opportunity Credit (IRS Form 8850) voluntarily before making a job offer.
  2. Certification Request: If the applicant meets one of the target groups, complete the Individual Characteristics Form (ETA Form 9061). If they have a Conditional Certification Form (ETA Form 9062), include this form instead.
  3. Submit the Forms: Submit the completed forms to the WOTC Center either online (eWOTC) or by mail to:

WOTC Center
2901 50th Street
Sacramento, CA 95817

Submit both forms within 28 days after the employee’s start date. If the forms are received before the employee’s start date or received after their first 28 days, the certification will be denied.

Note: Family members and former employees are not eligible for the WOTC.

For more details on confirming the employee’s eligibility, review our WOTC webpage.

Step 3: Wait for Certification

If the employee qualifies, the WOTC Center will send you an Employer Certification (DE 8727). If the forms are incomplete, you will be contacted for additional information. If the employee does not qualify, you will receive a denial letter.

Step 4: Claim Your Tax Credit

Once certified, claim the WOTC on your federal income tax return. If you don’t use the full credit in one year, you can carry it forward for up to 20 years.

Step 5: Understand Penalties and Audits

Make sure you answer truthfully. If you don’t, you could face penalties or an audit including:

Misrepresentation Penalties: These can be a fine or prison time for providing false information.

WOTC Audits: We may review 10% of certifications monthly. Invalid certifications will be revoked, and you will be notified.

For more information, choose one of the following:

  • Call us toll-free at 1-866-593-0173.
  • Email us and one of our friendly staff will be happy to help you.
  • Visit us online for forms and more important details.