Español

Work Opportunity Tax Credit FAQs

Below are answers to popular questions about the Work Opportunity Tax Credit, or WOTC.

No, employers cannot get a tax credit for hiring family members. This can include:

  • Children and stepchildren.
  • Siblings and step-siblings.
  • Parents and step-parents.
  • Aunts, uncles, nieces, and nephews.
  • In-laws (like a parent-in-law or child-in-law)
  • Anyone who lives with the employer.

No, the tax credit only applies when a person is hired for the first time by the employer.

Yes, the disabled veteran can qualify if they meet one of the following criteria:

  • They receive payments for a service-related disability and they were hired within one year of leaving active duty.
  • They were unemployed for at least six months before being hired.

The credit depends on the target group the employee belongs to. For example:

For most groups (TANF, veterans, ex-felons, designated community residents, vocational rehabilitation referrals, SNAP and SSI recipients, or long-term unemployed people):

  • 40% of first-year wages (up to $6,000) if the person works at least 400 hours.
  • 25% of first-year wages (up to $6,000) if they work between 120 and 399 hours.

For summer youth workers: The credit is 40% of first-year wages up to $3,000.

For long-term family assistance recipients:

  • 40% of first-year wages up to $10,000.
  • 50% of second-year wages up to $10,000. The person must work at least 180 days or 400 hours.
  • For most groups (TANF recipients, veterans, ex-felons, designated community residents, vocational rehabilitation referrals, summer youth workers, SNAP recipients, SSI recipients, or long-term unemployed):
    • 40% tax credit if the person works at least 400 hours.
    • 25% tax credit if they work between 120 and 399 hours.
  • For long-term family assistance recipients, the person must work at least 180 days, or 400 hours.

To apply for WOTC, follow these steps:

  1. Pre-Screening: Check if the person qualifies for the WOTC.
  2. Fill out two forms:
    • The Individual Characteristics Form (ETA 9061)
    • The Pre-Screening Notice and Certification Request (IRS Form 8850)
      Both the employer and the person applying for the job must sign these forms.
  3. Submit the forms:
    • Online: Use the Work Opportunity Tax Credit Online (eWOTC) system.
    • By mail: Send the forms to the EDD.
    • Forms must be sent within 28 days of the person starting the job.

If the person may qualify as a long-term unemployed recipient, include the Self-Attestation Form (ETA Form 9175).