WOTC Hiring from Targeted Groups
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.
WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers affected by economic or other hardships.
If your business is struggling to fill open positions, don’t overlook these applicants — they could save you between $1,200 and $9,600 each because of this tax credit. Better yet – The Consolidated Appropriation Act, 2021 authorized the extension of the Work Opportunity Tax Credit (WOTC) until December 31, 2025.
Your business can claim WOTC when it hires applicants from these groups:
- IV-A Recipients – The maximum tax credit for hiring a Qualified IV-A Recipient is $2,400. An individual who is a member of a family receiving assistance under a State plan approved under part A of title IV of the Social Security Act relating to Temporary Assistance for Needy Families (TANF). IV-A Recipient must receive the aid for any 9-month period during the 18-month period ending on the hiring date.
- Veterans – With a maximum credit of $9,600, these applicants are military veterans and meet one of 5 additional requirements. To be claimed, these veterans must
- have been enrolled in the Supplemental Nutrition Assistance Program (SNAP) for at least three months within the first 15 months of being hired, or
- have been unemployed for a consecutive or non-consecutive minimum of 4 weeks/maximum of 6 months within the year before being hired, or
- have been unemployed for a consecutive or non-consecutive minimum of 6 months within the year before being hired,
- be disabled, entitled to service-connected disability compensation from the military, and hired within the year after being discharged from active duty, or
- be disabled, entitled to service-connected disability compensation from the military, and unemployed for a consecutive or non-consecutive minimum of 6 months within the year before being hired.
- Ex-Felons – With a maximum credit of $2,400, these applicants are hired within the year after a felony conviction or released from prison after a felony conviction.
- Designated Community Residents (DCR) – With a maximum tax credit of $2,400, these applicants are between the ages of 18 and 40 who reside in certain economically distressed communities and continue to reside there after being hired.
- Vocational Rehabilitation Referrals – With a maximum tax credit of $2,400, these are applicants with physical or mental disabilities who have completed certain rehabilitation services.
- Summer Youth – With a maximum tax credit of $1,200, these applicants are between the ages of 16 and 18 and meet DCR requirements and specific employment period requirements.
- SNAP Recipients – With a maximum tax credit of $2,400, these applicants are between the ages of 18 and 40 and received SNAP benefits for all six months or a minimum of 3 months of the five months before being hired.
- Supplemental Security Income (SSI) Recipients – With a maximum tax credit of $2,400, applicants received SSI benefits for at least one month within the 60 days before being hired.
- Long-Term Family Assistance Recipients – With a maximum tax credit of $9,000 over two years, these are applicants who meet specific TANF requirements within the two years before being hired.
- Long-Term Unemployment Recipients – With a maximum tax credit of $2400, these are applicants who have been unemployed for a minimum of 27 consecutive weeks and received unemployment benefits for at least part of that period before being hired.
For example, organizations and companies in industries such as temporary staffing, transportation, warehousing, manufacturing, distribution, retail, food service, and healthcare (as well as other businesses which rely on an hourly-wage and entry-level workforce) are well suited to benefit from WOTC because of the nature of a higher turn-over rate for their industries.
Our WOTC Calculator can help determine the approximate amount of the credit.
Need WOTC Benefits Clarification?
Claiming WOTC on any of the target groups can be complicated. Plus, some of your current employees may qualify you for benefits retroactively. Book a call with the Arvo team for more information on the program.
Your business can have confidence in making WOTC claims when your onboarding process includes comprehensive background screening of new hires.
The credit represents a permanent reduction in income tax and directly reduces a business’s effective tax rate.
By leveraging this tax credit, your business will increase profits and obtain additional cash flow.
There is no limit to the amount of credit available through the program as a whole or to a single employer.
Why wait? See if you qualify today!
Arvo transforms cash flow for businesses through employment tax credit opportunities. Founded by tax experts, Arvo believes in tax credits’ power to improve business finances and built its cloud-based platform to help more businesses unlock the total value of federal and state incentive programs. Backed by technology and unparalleled client service, Arvo collaborates with companies to help them understand their qualifications and delivers actionable insights for leveraging programs that impact hiring decisions and fundamentally improve the economics of their business.