In today’s tough job market, the Work Opportunity Tax Credit (WOTC) may benefit employers—particularly those who hire workers from targeted groups who often face barriers to employment.
In September, the IRS issued updated information on the WOTC pre-screening and certification process. To meet the pre-screening requirements for job applicants, both applicants and employers must complete a pre-screening notice (Form 8850, Pre-Screening Notice, and Certification Request for the Work Opportunity Credit) on or before the day a job offer is made.
Which new hires qualify employers for the WOTC?
To be eligible for the WOTC, an employer must pay qualified wages to members of targeted groups.
These groups include:
- Temporary Assistance for Needy Families (TANF) program recipients
- Veterans
- Ex-felons
- Designated community residents
- Vocational rehabilitation referrals
- Summer youth employees
- Families in the Supplemental Nutritional Assistance Program (SNAP)
- Supplemental Security Income (SSI) recipients
- Long-term family assistance recipients
- Long-term unemployed individuals
Note that the WOTC is generally limited to eligible employees who begin work prior to January 1, 2026.
Additional WOTC rules and requirements
The WOTC is worth up to $2,400 for each eligible employee, with $4,800, $5,600, and $9,600 for certain veterans and $9,000 for long-term family assistance recipients.
Additional requirements to qualify for the tax credit include:
- Each employee must have completed at least 120 hours of service for the employer
- Employees must not be related or have previously worked for the same employer
- Summer youth employees must be paid for services performed in any 90-day period between May 1 and September 15
Work with our tax professionals
There are some cases in which an employer may choose to not claim the WOTC—and some circumstances where the rules may not allow its allocation. Most employers hiring from targeted groups, however, can benefit from the tax credit.
Contact us to work with an experienced tax advisor and determine the best next steps for your situation.