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Work Opportunity Tax Credit (WOTC)
Work Opportunity Tax Credit (WOTC) With legislation signed by the President in 2007, the WOTC program has been extended through August 31, 2011.This Act, and the Tax-Relief and Health Care Act of 2006 (P. L. 109-432) amend certain target group definitions, introduce new provisions that expand and streamline the WOTC Program, and make it easier for the business sector to participate. For example, P.L. 109-432 eliminated the Welfare-to-Work Tax Credit (WtWTC) by merging it into the WOTC and making the Long-term TANF Recipient another WOTC target group. The following statutory changes (introduced by P.L. 110-28) apply to new hires that begin work for an employer after May 25, 2007, and before September 1, 2011:
The changes introduced by P.L. 109-432 apply retroactively to individuals who began to work for an employer after December 31, 2005. They are as follows:
The consolidated WOTC for hiring most target group members can now be as much as:
The new employee must belong to one of the following nine WOTC target groups: * Long-term TANF Recipient. A member of a family that: a. Received or recently received Temporary Assistance to Needy Families (TANF) payments for at least 18 consecutive months ending on the hiring date, or b. Received TANF payments for any 18 months (whether or not consecutive) beginning after August 5, 1997, and the earliest 18-month period beginning after August 5, 1997 ended during the past 2 years, or c. Stopped being eligible for TANF payments during the past 2 years because federal or state law limited the maximum time those payments could be made. * Other TANF Recipient. A member of a family that is receiving or recently received TANF benefits for any 9-month period during the 18-month period ending on the hiring date; * Qualified Food Stamp Recipient. An 18-39 year old member of a family that received months, and is no longer receiving them. * Designated Community Resident. An 18-39 year old resident of one of the federally Communities (RCs), and for individuals who begin to work for an employer after May 25, 2007, this High-Risk Youth group has been renamed "Designated Community Resident" and expanded to include residents of Rural Renewal Counties; Note: All Round I Enterprise Communities (ECs) including enhanced Enterprise Communities expired on December 31, 2004. Round II ECs are still in existence as are all the EZ. and September 15; Note: All Round I Enterprise Communities (ECs) including enhanced Enterprise Communities expired on December 31, 2004. Round II ECs are still in existence as are all the EZs; * Qualified Veteran. A veteran who is a member of a family that is receiving or recently individuals who begin to work for an employer after May 25, 2007, the veteran group is expanded to include "disabled veterans" who are entitled to compensation for a service- connected disability and who, during the one-year ending on the hiring date, were: a) discharged or released from active duty in the U.S Armed Forces, or b) unemployed for a period or periods totaling at least 6 months. The first-year wages taken into account for these "disabled veterans" are capped at $12,000; * Vocational Rehabilitation Referral. An individual who completed or is completing rehabilitative services from a State certified agency, an Employment Network, or the U.S. * Qualified Ex-Felon. An individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was so convicted or released from prison; ending during the past 60 day period ending on the hire date. MINIMUM EMPLOYMENT OR RETENTION PERIOD. All new adult employees must work a minimum of 120 or 400 hours. Individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, before an employer is eligible to claim the tax credit. The WOTC amount an employer may claim depends on the hours the employee works. The credit is 25% of qualified first-year wages for those employed at least 120 hours but fewer than 400 hours and 40% for those employed 400 hours or more. To receive certification that a new employee qualifies the employer for this tax credit, the employer must: · Complete page one of IRS Form 8850 by the day the job offer is made. · Complete page 2 of IRS Form 8850 after the individual is hired. · Complete the one page ETA Form 9061. Mail the completed and signed IRS and ETA forms to: Virginia Employment Commission WOTC Coordinator - Room 209 P. O. Box 1358 Richmond, VA 23218-1358 The signed forms must be mailed within 28 days after the employee's employment-start date for all individuals who begin work for an employer on or after January 1, 2007. FORMS:
WOTC background and guidance information:
Long-Term Family Assistance Recipients who began work after December 31, 2006 and before September 1, 2011, can earn their employers up to $9,000 if they are a member of a family:
Employees who are members of the following target groups are eligible for the WOTC program: • Target Group A: TANF Recipient - any applicant that has received TANF (Temporary Assistance for Needy Families replaced the Aid to Families with Dependent Children (AFDC) program) for any nine months within the last 18 months ending on the hire date. • Target Group B: Qualified Veteran - any applicant that has been active in the military for 180 days and has received food stamps for three months within the last fifteen months ending on the hire date. This category was expanded to include Qualified Disabled Veterans • Target Group C: Qualified Ex-Felon - any applicant that has been convicted of a felony, placed on probation or released from prison within the year of the hire date. • Target Group D: Designated Community Resident (formerly Empowerment Zone Resident) - any applicant that is between the ages of 18 and 39 and lives in a federal mandated Empowerment Zone, Enterprise Community, Renewal Community or Rural Renewal Community. • Target Group E: Vocational Rehab Referral - any applicant that is participating in or has completed a vocational rehabilitation program within the last two years from the hire date. • Target Group F: Qualified Summer Youth - any applicant that is between the ages of 16 and 17 years old and is hired between May 1st and September 15th. • Target Group G: Qualified Food Stamp Recipient - any applicant that is between 18 and 39 years old and eligible for food stamp assistance. Benefits must be received within the last six months of the hire date, or three out of the last five months prior to the hire date. • Target Group H: SSI Recipient - any applicant that has received SSI (Supplemental Security Income) within the last 60 days of the hire date. • Target Group I: Long Term Family Assistance (formerly Welfare to Work Credit) - any applicant who has received TANF payments within the past two years. • Qualified Katrina Employee (extended October, 2008) Self-Certifying Category (no documentation required from employee) - Any employee who resided in the Katrina Disaster Area (AL, LA, or MS). • Unemployed Veterans (Created by ARRA) - Veterans who have been unemployed for at least six months. • Disconnected Youth (Created by ARRA) - 16-24 year olds, who are unemployed, not in school and do not have defined skills. Additional information about the WOTC program, including the ETA’s WOTC Handbook 408, is available on line at: 10-09
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Copyright © 2009. All rights reserved. The Virginia Employment Commission Is An Equal Opportunity Employer/Program. Auxiliary Aids and Services are Available Upon Request To Individuals With Disabilities. |
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