Sometimes you do get a break for doing the right thing. The Work Opportunity Tax Credit (WOTC) Program gives you, the employer, a federal tax credit that reduces your tax liability when you hire from nine different targeted groups:
• Qualified Temporary Assistance to Needy Families Recipients (TANF)
• Qualified Veterans/Disabled Veterans
• Qualified Ex-felons
• Qualified Designated Community Residents (DCR) residing in an Empowerment Zone (EZ), Renewal Community (RC), or in a Rural Renewal County (RRC)
• Qualified Vocational Rehabilitation Agency Referrals
• Qualified Summer Youth (SY)
• Qualified Food Stamp Recipients (FS)
• Qualified Supplemental Security Income Recipients (SSI)
• Qualified Long – Term Family Assistance Recipients. (LTFAR)
Maximum Credit Available
$1,200 for each new Summer Youth* hired;
$2,400 for each new Adult hired;
$4,800 for each new Disabled Veteran hired; and
$9,000 for each new Long Term Family Assistance Recipient hired over a two year period.
*The credit is based on 40% of up to $6,000 in qualified wages during the first year of employment. Summer Youth qualify for 40% of the first $3,000 in wages during the required working period of May 1 through September 15.
Minimum Employment or Retention Period
All new adult employees must work a minimum of 120 hours and individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, before an employer is eligible to claim the tax credit.
How to Apply for WOTC
To apply for a WOTC certification in Texas, you, the employer, must mail all pertinent information to the WOTC Unit in Austin. When the required information is received, an eligibility determination is made and when appropriate, a certification is issued.
Mail within 28 days of the employee’s job start date: IRS Form 8850: Pre-Screening Notice and Certification Request for the Work Opportunity Credit.
Mail as soon as possible: either ETA Form 9061: Individual Characteristics Form if the new employee has not been conditionally certified, or ETA Form 9062: Conditional Certification if provided to the job seeker by a participating agency.
Mail forms to:
Texas Workforce Commission/WOTC Unit
101 E. 15th Street, Room 202T
Austin, TX 78778-0001
By this time, you’re probably saying, “What are all these forms and groups? This looks too complicated. I’m not overloading myself with a bunch of paperwork. And, I need employees who meet my job specifications.”
Let me clue you in. Not much paperwork is involved and you can apply your job qualifications. The WOTC Unit is very helpful in answering your questions and helping with the paperwork. For hiring a WOTC qualified employee, there’s a benefit every business needs in tough economic times. When tax time rolls around, you tally up the taxes owed to Uncle Sam and do some subtraction to find the Work Opportunity Tax Credit. A nice way to find the employees you need and add dollars to your pocket.
Cally Graves is an Industry Liaison between business, workforce, and education working with Workforce Solutions . She has 35 years of experience in workforce development, primarily working with employers in Houston, Texas and the Gulf Coast region.