Industry Terms & Tax Credit FAQs |
What is WOTC?
The Work Opportunity Tax Credit is one tool in a diverse toolbox of flexible strategies designed to help move people from welfare into gainful employment and obtain on-the-job experience. It joins other tax credits, education, and job training programs that help American workers with barriers to employment prepare for good jobs; ease their transition from job to job; benefit from the creation of effective regional economic development strategies; and create high performance workplaces.
Who is helped by WOTC?
WOTC helps both employers and targeted job seekers alike. Employers save significantly as tax credits help defray payroll and other corporate expenses. Job seekers qualifying as a member of one of the nine targeted groups benefit by gaining an advantage in the job market as a potential employee.
Who are the WOTC Target Groups?
The federal WOTC program targets certain groups to be eligible for tax credits:
- TANF Recipient – A member of a family that has received assistance under a Temporary Assistance for Needy Families (TANF) program.
- Veteran – A veteran or member of a family that relieved Food Stamps for at least a three-month period within the last 15 months.
- Ex-Felon – A person convicted of a felony who within the past year was either convicted or released from prison.
- High-Risk Youth – Individuals between the ages of 18-24 living in a federally designated Empowerment Zone, Enterprise Community, or Renewal Community
- Qualified Summer Youth – Ages 16-17 (and only from May 15-September 15) who reside is a federally designated Empowerment Zone, Enterprise Community, or Renewal Community and have not previously worked for employer seeking this tax credit
- Vocational Rehabilitation Referral – A disabled person who has completed or is completing rehabilitative services from a rehabilitation agency approved by the state or the Department of Veterans Affairs.
- Food Stamp Recipient – A person between the ages of 13 and 39 AND member of a family that has received food stamps for the last six months OR received food stamps for at least three of the last five months, BUT is longer eligible to receive them.
- SSI Recipient – A person who has received Supplemental Security Income (SSI – under Title XVI of the Social Security Act) benefits for any month ending within the last 60 days.
- Long-term Family Assistance Recipient – An individual whose family has qualified as a long-term family assistance recipient who has been with the company for 2 years or more.
What does Eligibility refer to?
Eligibility refers to whether or not the applicant that you are screening is eligible (qualified, or is a candidate) for your organization to receive tax credits from if hired. Sometimes, candidates may be eligible for multiple credits, depending on a variety of factors which are identified in the tax credit screening process.
Who doesn’t qualify?
Employers may not make the credit for former employees, regardless of how long it has been since the employee last worked for them. Employers also cannot claim credits for family members or relatives.
What does Certification refer to?
Certification refers to the status of organizations that are certified (qualified) for receiving certain tax credits from the government.
What does Average Credit refer to?
Average credit refers to the average value of the credits received per employee for your organization. This number can vary depending on your hiring practices, demographics, and location.
What/who is DOL?
DOL stands for the Department of Labor, the key regulator of tax credits and regulations. The Department of Labor is responsible for fostering and promoting the welfare of job seekers and earners by advancing their opportunities for profitable employment, helping employers find workers, among other things.
What are Forms 8850 & 9061?
IRS Forms 8850 and 9061 are used in the tax screening process to determine whether an individual qualifies for tax credits. Form 8850 is used to apply for WOTC tax credits, and must be signed by the applicant on or before the first day of offer. Form 9061, which can be fulfilled using information taken from Form 8850, is used to specify the particular target group of the applicant under the WOTC program and to provide specific employment information needed.