Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) was created to reward employers who hire new employees from one of eight different targeted groups. The rewards are in the form of tax credits. Most certified employees received welfare (AFDC) or food stamps prior to their hire. Certified employees must work at least 120 hours to qualify for a credit. Employees certified for WOTC earn a 25% credit of gross wages paid once they have worked between 120-399 hours. If they work 400 hours, they earn a tax credit of 40% of their first $6,000 of gross wages paid during their first year of employment, up to a maximum credit of $2,400.

Employees who are long-term family assistance recipients are certified for WOTC Target Group I. This target group was created on 1/1/07 when the Welfare to Work Tax Credit was merged with WOTC.

WOTC Target Group I certified employees earn a 25% credit of gross wages paid once they have worked between 120-399 hours. If they work 400 hours, they earn a tax credit of 40% of their first $10,000 of gross wages paid during their 1st year of employment, up to a maximum 1st year credit of $4,000.

For WOTC Target Group I certified employees in their 2nd year of employment, the credit is calculated at 50% of the first $10,000 of wages paid with a maximum 2nd year credit of $5,000.

WOTC Program Highlights

Each applicant completes a Form 8850 Pre-Screening Notice on or before their first day of work. The 8850 identifies employees who may be eligible for a tax credit based upon their age and their responses. Once completed, your hiring manager mails us the original Form 8850, and makes copies for the employee's personnel file, and we handle the rest!

SimTax does 99% of the work. It should never take more than a minute or two per new hire for our clients to participate in this program. This minimal time investment provides your company with the opportunity to earn up to a $9,000 credit.