The Work Opportunity Tax Credit (WOTC) is a federal income tax credit designed to help people gain on-the-job experience and acquire better employment. The WOTC program offers federal tax credits to employers as an incentive to hire people in several specific target groups. WOTC applies only to new employees. The new employee must belong to one of the following nine target groups:
- Temporary Assistance to Needy Families Recipient
- Veteran who is receiving CalFRESH (food stamps), or a Disabled Veteran with a 10 percent or higher disability
- Ex-Felon
- Designated Community Resident
- Vocational Rehabilitation referral
- A summer youth
- 18-39 year old CalFRESH (food stamps) recipient
- Supplemental Security Income recipient
- Long-term family assistance recipient
The employee must be retained at least 400 hours for a 40% tax credit on qualified first year wages up to $6,000 (yielding a $2,400 max credit when all requirements are met). For the employee that is retained at least 120 hours but less than 400 hours a 25% tax credit is available on qualified first year wages up to $6,000 ($1,500).
The qualified summer youth category is based on qualified first year wages up to $3,000 ($1,200 max credit) and qualified wages for disabled veterans only, was increased from $6,000 to $12,000 ($4,800 max credit). The hiring of qualified long-term family assistance recipients provides for a tax credit of 40% on qualified first year wages up to $10,000 and 50 percent on second year qualified wages up to $10,000 for a total potential of $9,000 tax credit. This employee must be retained a minimum of 400 hours to receive the full tax credit.
This tax credit is highly time sensitive so please contact the EDC at bear@fresnoedc.com or (559) 464-5550 before hiring anyone (or within 14 days of hiring someone) to learn the complete paperwork process of claiming this incentive.