By Teresa Adams
The Work Opportunity Tax Credit (WOTC) is available to employers in Tennessee who hire people from specific target groups that experience barriers to employment.
Congress has reauthorized the Work Opportunity Tax Credit (WOTC) program retroactive to January 1, 2012, through December 31, 2013. The authorization covers all targeted groups, including qualified individuals who have disabilities or receive public assistance, as well as veterans.
About the Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal income tax benefit administered by the U.S. Department of Labor (DOL) for private, for-profit employers who hire individuals from specified target populations. WOTC reduces a business’s federal tax liability, serving as an incentive to select job candidates who may be disadvantaged in their efforts to find employment.
Under this program, employers can claim a tax credit on their federal taxes for each qualifying new hire. The amount of the tax credit is based on the amount of wages paid to each eligible worker.
NOTE: Employers cannot claim the Work Opportunity Tax Credit for their relatives, former employees or undocumented workers.
Also, each eligible worker must be employed for at least 120 hours in order for the employer to claim the tax credit. If the new hire has another job at the time s/he is hired by the requesting employer, but otherwise meets the eligibility criteria, then the new employer can claim the tax credit.
Who’s eligible to claim the WOTC?
Private-sector employers and tax-exempt organizations (e.g., 501(c) or 501(a) non-profits) may participate (Tax-exempt organizations may apply for credit only against the employer part of the Social Security tax liability on qualified veterans.).
The Work Opportunity Tax Credit (WOTC) provides a tax credit for employers who hire individuals who belong to one or more of the nine target groups specified in the law. If you have any questions about qualification status, please contact us for more information.
Applying for the Tax Credit
Follow these three simple steps:
In an effort to streamline the WOTC application requirements, recent IRS guidance (Notice 2012-13) allows employers to submit a completed and signed Form 8850 to TDOL&WD via a fax transmission. All faxed WOTC applications should be sent to 615-532-1612.
Additional State Tax Credit in Tennessee:
Employers may also be eligible for a “State Tax Credit” under the Tennessee Jobs Tax Credit for Hiring Persons with Disabilities (TJTC). This is a one-time “State Tax Credit” which may be available to qualified employers who establish either full-time or part-time jobs(s) for persons with disabilities who are receiving state services directly related to such disability. For more information about the Tennessee Jobs Tax Credit for Hiring Persons With Disabilities, visit the Tennessee Department of Labor and Workforce website.
As always, please feel free to contact us if you have any questions, or think your business or organization may qualify for the WOTC.