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Work Opportunity Tax Credit

WOTC expires; employers should continue to apply

The Work Opportunity Tax Credit Program (WOTC) expired on Dec. 31, 2013. 

We don’t know if or when Congress will extend it again, but, in the past, Congress has always reauthorized the program back to the date of expiration. Therefore, we encourage employers to continue submitting WOTC applications for all target groups within 28 days after each potentially eligible new employee starts working for you.

The targeted groups include qualified individuals who have disabilities or receive public assistance, as well as veterans.

About the Work Opportunity Tax Credit

Under this program, employers can claim a tax credit on their federal taxes for each qualifying new hire.  The amount of the tax credit is based on the amount of wages paid to each eligible worker.

Employers cannot claim the Work Opportunity Tax Credit for their relatives, former employees or undocumented workers.

Also, each eligible worker must be employed for at least 120 hours in order for the employer to claim the tax credit. If the new hire has another job at the time s/he is hired by the requesting employer, but otherwise meets the eligibility criteria, then the new employer can claim the tax credit.

Application deadlines

In Washington state, employers must receive certification from the Employment Security Department in order to deduct the credit on their annual tax returns. Applications must be submitted no more than 28 days after the qualifying employee begins the new job. All late and incomplete applications will be denied.

Also, all applications must be submitted through our WOTC online filing system. See “Application instructions” below for more information.

Who's eligible?

Private-sector employers and tax-exempt organizations (e.g., 501(c) or 501(a) non-profits) may participate. (Tax-exempt organizations may apply for credit only against the employer part of the Social Security tax liability on qualified veterans.)

There are several categories of veterans and non-veterans who qualify for WOTC.

Veterans
The credit is available for qualifying veterans who meet the criteria for one or more of the following categories at the time of hire.

Categories of eligible veterans

Qualified first-year wages*

Maximum credit

Veteran who received food stamps (Supplemental Nutrition Assistance Program, or SNAP) for 3 consecutive months within the last 15 months.$6,000
$2,400
Veteran who is entitled to compensation for a service-connected disability and was discharged from the military no more than 1 year prior to the hiring date.$12,000
$4,800
Veteran who is entitled to compensation for service-connected disability and was unemployed for at least 6 months during the year prior to the hiring date.
$24,000
$9,600
Veteran who was unemployed for at least 4 weeks and less than 6 months during the year prior to the hiring date.$6,000
$2,400
Veteran who was unemployed for at least 6 months within the year prior to the hiring date.$14,000
$5,600

* This column shows the maximum amount of wages that may be used to calculate the tax credit.

Other target groups
Employers who hire long-term public-assistance recipients may claim a credit of up to $9,000 in the first two years of employment. WOTC for other non-veteran target groups is up to $2,400 for the first year. The new hire must meet one of the following criteria at the time of hire.

People receiving public assistance

1.  An individual who received welfare (Temporary Assistance to Needy Families, or TANF)
     cash benefits for at least one month as a member of the family that:
     •  Received TANF payments for nine or more of the last 18 months, or
     •  Received TANF for at least the previous 18 consecutive months, or
     •  Received 18 months of TANF since August 1997, and the 18th month is within the last 
         two years, or
     •  Stopped being eligible for TANF payments within the last two years because he or 
         she exceeded the maximum time allowed for benefits.
2.  An individual aged 18 to 39 who received food stamps (SNAP) for at least one month as a
     member of the family that received food stamps for six consecutive months prior to the
     hiring date.

Ex-felons
•  Released from prison within the year prior to being hired, or
•  Participating in a work-release program.

People with disabilities
A person who:

•  Is participating in a vocational-rehabilitation program through the DSHS   
    Division of Vocational Rehabilitation, Services for the Blind, the U.S. Veteran’s
    Administration or the Social Security Ticket-To-Work program, or
•  Received Supplemental Security Income (SSI) for any month in the 60 days prior to being 
    hired.

NOTE: Employers cannot claim Work Opportunity Tax Credit for their relatives, former employees or undocumented workers.

Application instructions

Beginning in October 2012, Washington state requires WOTC applications to be submitted online through the WOTC online filing system. Further instructions are provided within the online filing system. See the “Instructions” link at the bottom of each screen.

Starting in October 2012, if you’re near the end of the federal 28-day time limit for submitting the application and you’ve been unable to register in the online system (e.g., if you have technical difficulties or don’t have the necessary registration information handy), you may mail your application so it’s postmarked before the deadline (follow instructions 1-4 below) – but then submit the application through the online filing system within seven calendar days. We will process your application only after you’ve completed the online application.

Follow these four steps:

     1.  Have the applicant complete and sign the pre-screening form (IRS 8850,
          see form instructions).
     2.  If the applicant has checked one of the boxes on the IRS 8850 form, employer
          completes and signs Page 2 of the form.
     3.  Complete the Individual Characteristics form (ETA 9061).
     4.  Submit forms data through the online filing system.


Appeals-related documents or correspondence may be mailed to:
Employment Security Department
WOTC Administrative Unit
P.O. Box 9046
Olympia, WA 98507-9046

For more information, call 800-339-3981.


 

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