The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to private-sector businesses and certain nonprofit organizations for hiring certain individuals, including veterans, who have consistently faced significant barriers to employment.
The WOTC program enables the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income, while participating employers are able to reduce their federal income tax liability.
The VOW to Hire Heroes Act of 2011 extended and expanded the tax credit for veterans. Through WOTC, employers can receive up to $2,400 and $9,600 in tax credits by hiring:
- Veterans receiving Supplemental Nutrition Assistance Program (food stamps) benefits.
- Veterans with a service-connected disability hired within 1 year of discharge or release from active duty.
- Veterans with a service-connected disability who are unemployed for at least 6 months.
- Veterans who have been unemployed for at least 4 weeks.
- Veterans who have been unemployed for 6 months or more.
The WOTC only applies to new employees, and the qualified veteran must start work on or after November 22, 2011 and before January 1, 2013. Before claiming WOTC on a federal tax return, employers must first apply for and receive certification from a State Workforce Agency that the new hire is a veteran that meets the required qualifications.
To apply for the certification, employers must:
1. Complete IRS Form 8850, Pre-Screening Notice and Certification Request for the Work
Opportunity Credit, by the date of the job offer.
2. Complete one of the following U.S. Department of Labor forms:
- ETA Form 9061, Individual Characteristics Form; or
- ETA Form 9062, Conditional Certification Form (if provided to the job seeker by a Participating Agency, such as Vocational Rehabilitation, an Employment Network, or a State Workforce Agency).
3. Submit the forms to the State Workforce Agency within the following timeframes:
- For hires made before May 22, 2012, employers have until June 19, 2012 to submit.
- For hires made on or after May 22, 2012, employers must submit not later than 28 days after the new hire begins work.
To access these forms and find more information on the WOTC program, how to claim the tax credit, and a list of state contacts, visit the Department of Labor’s WOTC program website at www.doleta.gov/wotc and the IRS website at www.irs.gov/form8850. You should also visit www.benefits.va.gov/VOW for additional information related to VOW.
Please continue to check www.va.gov and www.dol.gov for changes and updates to the VOW to Hire Hero Act programs and benefits. Last updated on 04/26/2012.