The Work Opportunity Tax Credit (WOTC) is a federal tax program encouraging employers to hire and retain individuals from targeted groups facing significant barriers to employment. The program incentivizes workplace diversity and facilitates access to quality jobs for US workers.
Employers who hire individuals from the following targeted groups are eligible for tax savings through the WOTC program.
Qualified IV-A Recipient
A qualified IV-A recipient is an individual who is a member of a family receiving assistance under a state program funded under part A of Title IV of the Social Security Act relevant to Temporary Assistance for Needy Families (TANF). The assistance must be received for any 9 months during the 18 months ending on the hiring date.
Qualified Veteran
A qualified veteran meets any of the following criteria:
- A member of a family receiving assistance under SNAP for at least 3 months during the 15 months ending on the hiring date
- Unemployed for at least 4 weeks (need not be consecutive) but less than 6 months in the 12 months ending on the hiring date
- Unemployed for at least 6 months (need not be consecutive) but less than 6 months in the 12 months ending on the hiring date
- Entitled to compensation for service-connected disability and hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces or
- Entitled to compensation for service-connected disability and unemployed for at least 6 months (need not be consecutive) in the 12 months ending on the hiring date
Qualified Ex-Felon
A qualified ex-felon is an individual hired within 12 months of being convicted of a felony or being released from prison for the felony.
Designated Community Resident
A designated community resident (DCR) is an individual who, on the hiring date, is 18 to 39 years old and has a principal residence in an Empowerment Zone (EZ) or a Rural Renewal County (RRC). When determining the credit, wages do not include those paid or incurred for services performed while the individual’s principal residence was outside an EZ or RRC.
Vocational Rehabilitation Referral
A vocational rehabilitation referral is an individual who has a physical or mental disability and was referred to the employer while receiving or after completing rehabilitative services related to:
- A state plan approved under the Rehabilitation Act of 1973
- An Employment Network Plan under the Ticket to Work program or
- A program carried out under the Department of Veteran Affairs
Qualified Summer Youth Employee
A qualified summer youth employee is an individual who:
- Is at least 16 years old but under 18 on the hiring date or on May 1, whichever is later
- Performs services only for the employer between May 1 and September 15 (was not employed before May 1) and
- Resides in an Empowerment Zone (EZ)
Qualified Supplemental Nutrition Assistance Program Benefits Recipient
A qualified SNAP benefits recipient is an individual who on the hiring date is 18 to 39 years old and a member of a family that received SNAP benefits for the previous 6 months or at least 3 of the previous 5 months.
Qualified Supplemental Security Income Recipient
A qualified Supplemental Security Income (SSI) recipient is an individual who received SSI benefits for any month ending within 60 days of the hire date.
Long-Term Family Assistance Recipient
A long-term family assistance recipient is an individual who, at the time of hiring, is a member of a family that meets one of the following conditions:
- Received assistance under an IV-A program for a minimum of the prior 18 consecutive months
- Received assistance under an IV-A program for a minimum 18-month period beginning after August 5, 1997, and it has not been more than 2 years since the end of the earliest of such 18-month period or
- Ceased to be eligible for assistance under an IV-A program because a federal or state law limited the maximum time those payments could be made, and it has been not more than 2 years since the assistance ended
Qualified Long-Term Unemployment Recipient
A qualified long-term unemployment recipient is an individual who has been unemployed for at least 27 consecutive weeks at the time of hiring and who received unemployment compensation during some or all of the unemployment period.
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