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Work Opportunity Tax Credit Available to Employers

work tax credit

1 minute read

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire people from certain targeted groups. The targeted groups include veterans and ex-felons - people who consistently face employment barriers.

Employers can claim the tax credit for wages paid to these individuals during their first year of employment, if they are hired before December 31, 2020, and work at least 120 hours the first year. The employer will need to obtain certification from a state workforce agency that an individual is a member of a targeted group. If the employer doesn’t obtain the certification prior to the individual’s start date, they must file Form 8850 with the state workforce agency within 28 days of the hire date.

The credit can be calculated as:

  • 25% of the wages paid to an employee who worked 120-400 hours, or
  • 40% for an employee who worked 400+ hours.

The amounts are subject to maximums which are dependent upon the employee’s targeted group classification.

The WOTC was enacted in 2007 and was set to expire in 2019. It was extended for another year, allowing employers to claim it for employees hired on or after December 31, 2020.

Download the bulletin for more information.

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National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Bill Disch

Bill Disch

Since he was young, Bill Disch has possessed a strong sense of service – from delivering milk and newspapers, to serving in the Air Force. His integrity and strong desire aid in his want to make a difference in whatever he’s doing. Bill is known for his strong analytical capabilities and smart business sense. He enjoys coming up with creative solutions to complex problems by working together with all involved and leveraging his clients’ knowledge and talent. Bill has a background as a CPA and as an Assistant Business Superintendent for a Michigan K-12 school. He worked with National Insurance Services (NIS) for over 17 years in his previous employment and is happy to join the NIS service team. Bill will be working as a Senior Account Representative in Indiana, as well as growing life and disability in Market Development in Michigan. He is a licensed insurance agent.