President Obama signs huge tax and spending package into law, includes 5 year extension(retroactively to Jan. 1, 2015) of the Workers Opportunity Tax Credit for Employers!

Within  this spending bill, there are two great WOTC items to note.  

  1. WOTC was renewed retroactively through December 31, 2019- for 5 years.
  2. Another target group has been added- Long Term Unemployment Recipient.

What is WOTC?

As defined by the U.S. Department of Labor, the Work Opportunity Tax Credit (WOTC) is a federal tax credit which is available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.  Those eligible target groups include the following:

  •           Unemployed Veterans (Disabled veterans included) 
  •          Temporary Assistance for Needy Families (TANF) recipients
  •          Food Stamp (SNAP) recipients
  •          Ex-Felons
  •          Vocational Rehabilitation Referred Individuals
  •          Designated community residents (living in Empowerment Zones or Rural Renwal Counties)
  •          Supplemental Security Income Recipients
  •          Summer Youth employees (living in Empowerment Zones)
  •          Long Term Unemployment Recipient (New for 2016)

The goal of the WOTC is to provide the opportunity for the previous groups of people to move away from economic dependency into self-sufficiency as they earn a steady income, so they no longer need to rely on benefits, while employers can receive federal credit as a reward for hiring someone in the target groups.

On July 21st, the Senate Finance Committee approved numerous tax provisions which will be extended through the end of 2016.  Among them was the WOTC.   The provisions enabled employers to receive a credit of up to $2,400-$9,600 per employee for hiring individuals who have exhausted state and federal unemployment benefits.  Hiring someone from the eligible groups can be very beneficial financially for your business.  Not only do you get financially supported for doing so, it also helps out the community.


How to Claim the Credit

With a monthly subscription to myHRcounsel’s concierge, we will do the filing for our clients.  

The necessary forms to be filed by employers are the following:

  •          IRS Form 8850
  •          ETA Form 9061 or ETA Form 9062

Each of the forms must be submitted to the state workforce agency within 28 calendar days of the employee’s start date.