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 Requirements
Only new hires are eligible for WOTC. To qualify for this credit, each applicant completes 2 forms on or before their first day of work. If these forms identify a new hire as potentially eligible, your hiring manager calls our computer center for a brief, 60-90 second phone interview. At the end of the interview, the operator will ask your hiring manager to mail in the paperwork in the postage paid envelopes we provide, or to just file the paperwork in the employees personnel file.

SimTax does 99% of the work! While it only takes 2-3 minutes for our clients for each new hire, it can take SimTax many hours per new employee. This 2-3 minutes provides you with the opportunity to earn up to a $9,000 credit for every new hire.