Tax Credit For Hiring Program
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive that employers may receive for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The main objective of this program is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are compensated by being able to reduce their federal income tax liability.
Employers make the hiring decision, and there is no limit to the number of new hires who can qualify the employer for the tax savings, but individuals must be identified as members of one of these targeted groups before a job offer is made. For a list of the targeted groups, go to www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit.
Amount of the Credit
The amount of the tax credit is based on a percentage of qualified wages paid to the new employee for the first year of employment only (with the exception of the long term TANF recipient). Both the percentage and the cap on qualifying wages vary based on which target group the new employee falls into. For more details on WOTC benefit amounts, go to www.doleta.gov/business/incentives/opptax/.
The first step is pre-screening to determine eligibility. The job seeker or the employer must complete the following forms:
- Page 1 of IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Tax Credit, by the date of the job offer; and page 2 after the individual is hired. Employers can obtain copies of IRS 8850 by visiting www.irs.gov/form8850 or calling 1-800-829-3676.
- ETA Form 9061, Individual Characteristics Form, if the new hire has not been given an ETA Form 9062; OR ETA Form 9062, Conditional Certification Form, if provided to the job seeker by a Participating Agency, a SWA, or a Vocational Rehabilitation Agency. Employers can obtain copies of ETA 9061/9062 by visiting www.doleta.gov/business/incentives/opptax/.
The employer and the job seeker must sign the Form 8850, under penalty of perjury, attesting that the job seeker is a member of a target group. The employer then forwards the forms to the Department of Career Services no later than the 28th day after the job seeker begins work at the following address:
Work Opportunity Tax Credit Unit
Department of Career Services
19 Staniford Street
Boston, MA 02114
For more information and additional filing options (fax, email, online), contact the Department of Career Services at (617) 626-5353.