The Work Opportunity Tax Credit (WOTC)
WOTC Overview
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to all private sector businesses as an incentive to employers to hire workers in certain groups who consistently experience high rates of unemployment. From a tax perspective, the WOTC can reduce an employer's cost of doing business.
The tax credit allows employers to reduce their federal tax liability by up to $9,000 per new hire. For-profit businesses of any size qualify. And the tax credit applies to temporary, seasonal, part-time and full-time workers. The tax credit is available for new hires identified within the first 28 days of the job start date until December 31 of the calendar year.
The WOTC applies only to new employees who have never worked for the hiring employer at any other time. Other criteria include:
- For-profit employers of any size may apply for the WOTC
- There's no limit to the number of new hires an employer may claim for the WOTC in any calendar year
- No relatives or dependents or majority business owners qualify as WOTC hires
- Self-employed individuals do not qualify as WOTC hires
- Temporary, seasonal, part-time and full-time work applies
- Any type of job qualifies
- There is no limit to the number of new hires that can qualify an employer for the WOTC in a calendar year or the amount of tax credit an employer can accrue
