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Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit (WOTC), authorized by the Small Business Job Protection Act of 1996 (P.L. 104-188), is a Federal tax credit that encourages employers to hire nine targeted groups of job seekers by reducing employers' Federal income tax liability by as much as $2,400 per qualified new worker. To be eligible for this tax credit, an employee must belong to at least one of the following target groups.

WHAT NEW HIRES CAN QUALIFY EMPLOYERS FOR WOTC?

• A member of a family that is receiving or recently received Temporary Assistance to Needy Families (TANF) or Aid to Families with Dependent Children (AFDC),
• An 18-24 year old member of a family that is receiving or recently received Food Stamps ,
• An 18-24 year old resident of one of the Federally designated Empowerment Zones (EZs), Enterprise Communities (ECs), or Renewal Communities (RCs),
• A 16-17 year old EZ/EC or RC resident hired between May 1 and September 15 as a Summer Youth Employee,
• A veteran who is a member of a family that is receiving or recently received Food Stamps ,
• A disabled person who completed or is completing rehabilitative services from a State or the U.S. Department of Veterans Affairs ,
• An ex-felon who is a member of a low income family,
• A recipient of Supplemental Security Income (SSI) benefits, and/or
• The New York Liberty Zone Business Employee (requires no certification).

HOW CAN EMPLOYERS PARTICIPATE IN THE WOTC?

To receive certification that a new employee qualifies the employer for this tax credit, the employer must:

• Complete the one page IRS Form 8850 by the day the job offer is made.

• Complete either the one page ETA Form 9061 or Form 9062

• If the new employee has already been conditionally certified as belonging to a WOTC target group, complete the bottom part of ETA Form 9062 (and sign and date it), that he or she has been given by a State Employment Security Agency or participating agency, e.g., a Job Corps center.
• If the new employee has not been conditionally certified, the employer and/or the new employee must fill out and complete, sign and date ETA Form 9061
• Use Form 5884 to claim the Work Opportunity Credit for qualified first-year wages you paid to or incurred for targeted group employees during the tax year.

• Mail the signed IRS and ETA forms to the employer's State Workforce Agency. In Pennsylvania this would go to:

PA Department of Labor & Industry
Bureau of Workforce Investment
12 th Floor Labor & Industry Building
Harrisburg, PA  17120
(717)787-6915

If not in PA, contact your local Labor & Industry office to obtain a mailing address.

• The IRS 8850 form must be mailed within 28 days of the employee's employment-start date.

Form 8850 - Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits

ETA 9061- Individual Characteristics Form Work Opportunity and Welfare-to-Work Tax Credits

Form 5884 - Form 5884 - To Claim Work Opportunity Credit

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