The Work Opportunity Tax Credit in Tennessee

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The Work Opportunity Tax Credit in Tennessee

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.

  1. WOTC can provide up to $2,400 in tax relief for each qualifying hire, and up to $9,000 for long term family assistance recipient hires.
  2. Full-time, part-time, and temporary employees make your business eligible for the tax credit.
  3. Employers may claim a tax credit on an unlimited number of qualifying new hires.

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.military hire

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.).

Target Groups

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.

  1. Qualified recipients of TANF (Temporary Assistance to Needy Families)
  2. Qualified Veteran
  3. Qualified Ex-Felon
  4. Qualified High Risk Youth
  5. Vocational Rehabilitation Referral
  6. Qualified Summer Youth
  7. Qualified Food Stamp Recipients
  8. Qualified recipient of Supplemental Security Income (SSI)
  9. Long-term family assistance recipient

Applying for the Tax Credit

Follow these three simple steps:

  1. 1. Have the applicant complete and sign the pre-screening form IRS Form 8850. The form must be signed by both the employer and employee (see Form 8850 instructions for additional information).
  2. 2. Complete the U.S. Department of Labor Form ETA 9061. Submit the form, with IRS Form 8850 to the TN Department of Labor and Workforce Development.
  3. 3. Mail the signed and dated IRS and DOL ETA form to the TN Department of Labor and Workforce Development. The form must be postmarked to the address below within 28 calendar days of the employee’s job start date.

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.

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