Reap the Benefits of the Work Opportunity Tax Credit

In December 2020, an extension to the Work Opportunity Tax Credit was signed in law. The WOTC helps match employers with qualifying candidates, such as veterans, and provides a tax incentive for continued employment.

The Basics

What do you need to know about this credit and how it can affect you and your business?

  1. Qualifying veterans. To qualify for WOTC, the new employee must be a veteran who received SNAP (food stamp) benefits for a designated period of time, or a disabled or unemployed vet. For more details about these categories, the length of time to qualify for eligibility and more, review the WOTC page at the Department of Labor Employment and Training Administration website.
  2. Nonveteran qualifying candidates. There are also WOTC programs available for individuals who have not served in the United States military. To qualify, an individual must be a Temporary Assistance for Needy Families (TANF) recipient, a SNAP recipient, a resident of a qualifying community such as Rural Renewal Counties, an ex-felon or a Supplemental Security Income recipient. The official website can provide more on these target groups.
  3. Nonqualifying candidates. Besides individuals not listed among the target groups, there are certain individuals who are specifically disqualified from the WOTC programs. These include relatives or dependents, majority owners of the business and former employees of the company.
  4. Tax credit extension period. The WOTC program, which was originally created in 1996 as a one-year measure, has been extended and expanded many times. Most recently, lawmakers voted in December 2020 to extend the program until January 2025.

Do you want to know whether your company can qualify for the WOTC program?

To learn more about the extended WOTC program and how it might benefit your company, consult with our employment tax experts