Frequently Asked Questions

Q. What is the Work Opportunity Tax Credit (WOTC)?

A. The WOTC has two purposes:

• To promote the hiring of individuals who qualify as a member of a target group, and
• To provide a federal tax credit to employers who hire these individuals.

Q. What are the target groups?

A. There are nine WOTC target groups:

• Qualified recipients of Temporary Assistance to Needy Families (TANF).
• Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability.
• Ex-felons hired no later than one year after conviction or release from prison.
• Designated Community Resident – an individual between the ages 18 through 40 on the hiring date who reside in an Empowerment Zone, Renewal Community, or Rural Renewal County.
• Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network.
• Qualified summer youth ages 16 through 17 who reside in an Empowerment Zone, Enterprise Community, or Renewal Community.
• Qualified Food Stamp recipients ages 18 through 40 on the hiring date.
• Qualified recipients of Supplemental Security Income (SSI).
• Long-term family assistance recipients.

Q. Can a former employee be rehired and qualify the employer for the tax credit?

A. Employers may not request certification on former employees who have been rehired. The employee must have been WOTC qualified and certified as such only the first time he/she was hired by the employers.

Q. Do disabled veterans now qualify an employer for the tax credit?

A. If the disabled veteran is in receipt of payments from the Veteran’s Administration for a service connected disability AND

• Has a hiring date which is not more than one year after having been discharged or released from active duty, OR
• Has had aggregate periods of unemployment during the one year period ending on the hiring date that equal or exceed six months, they would qualify the employer for the tax credit.

* Note: The qualified wages for disabled veterans ONLY is increased from $6,000 to $12,000.

Q. What is the amount of the credit available through WOTC?

A. The amount of the tax credit varies by target group. The tax credit for target groups A,B,C,D,E,G, and H is 40 percent of qualified first year wages up to $6,000 if the individual is retained for at least 400 hours. If the individual is retained less than 400 hours but at least 120 hours a 25 percent tax credit is available on qualified first year wages up to $6,000.

The tax credit for target group I, long-term recipients of AFDC is 40 percent of first year qualified wages up to $10,000 and 50 percent of second year qualified wages up to $10,000. The individual must be retained at least 180 days or 400 hours.

Q. For which tax years can the credit be applied?

A. Employers may claim the Work Opportunity Tax Credit for a total of two years. Employers who do not take the full credit amount because of the tax liability limitation may carry back one year of forward 20 years.

Q. How long must the individual remain on the job to provide the employer with a tax credit?

A. Target groups A through H have a two-tier retention period; 400 hours for a 40 percent tax credit, at least 120 hours but less than 400 hours for a 25 percent tax credit.

Target group I (long-term family assistance recipient) must be retained 180 days or 400 hours.

Q. What is the process for applying for WOTC?

A. Three pieces of information must be submitted:

• Applicant must complete and sign the WOTC Questionnaire
• Applicant must complete and sign the 8850 form
• Employer must complete the hiring information sheet

Mail to:

MJA & Associates
PO Box 3024
Corona, CA 92878

Q. Can the forms be sent by fax or electronically via the Internet?

A. No, only original signatures are accepted by the WOTC Centers.

Q. Who do I contact to get more information?

A. Please call (951) 272-8294 or email info@mja-associates.com to get more information.