Which employers are eligible for the work opportunity tax credit?

Which employers are eligible for the work opportunity tax credit?

Employers, including certain tax-exempt employers, may be eligible for the work opportunity tax credit if they hire individuals who face employment barriers.

Work Opportunity Tax Credit

  • This is a one-time credit for each new hire. To claim the credit, employers must file Form 8850, Pre-Screening Notice and Certification Request for the credit with their state workforce agency.
  • Before an employer may claim the credit, the employer must obtain certification that an individual is a member of a targeted group.
  • A taxable business may apply the credit against its business income tax liability and tax-exempt employers can claim the credit against payroll taxes. The instructions for Form 3800, General Business Credit, provide more details.
  • Employers cannot claim the WOTC for employees who are rehired.

Targeted Groups

  • Qualified IV-A Recipient
  • Qualified Veteran
  • Ex-Felon
  • Designated Community Resident (DCR)
  • Vocational Rehabilitation Referral
  • Summer Youth Employee
  • Supplemental Nutrition Assistance Program (SNAP) Recipient
  • Supplemental Security Income (SSI) Recipient
  • Long-Term Family Assistance Recipient
  • Qualified Long-Term Unemployment Recipient

Original content by irs.gov. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.