Worker Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit that employers can claim for hiring individuals from certain targeted groups who have faced significant barriers to employment. It is one of the most straightforward tax incentives available — and most employers who qualify are leaving thousands of dollars on the table every year.
What Is the WOTC?
The Work Opportunity Tax Credit (WOTC) is authorized under IRC Section 51 and administered jointly by the IRS and the U.S. Department of Labor. It provides a dollar-for-dollar federal tax credit to employers who hire workers from designated targeted groups.
The credit is calculated as a percentage of qualified first-year wages — and in some cases second-year wages — paid to eligible employees. The credit amount varies by targeted group and the number of hours the employee works, but can be worth up to $9,600 per qualifying new hire.
WOTC is available to businesses of all sizes and across virtually every industry. If you are already hiring from these groups, you may be entitled to significant credits you have never claimed.
Targeted Groups That Qualify
To qualify for the WOTC, a new hire must be a member of one of the following federally designated targeted groups:
Qualified Veterans
Veterans who are members of a family receiving SNAP benefits, have a service-connected disability, or have been unemployed for specified periods. Credit up to $9,600 per hire.
Long-Term Unemployment Recipients
Individuals who have been unemployed for at least 27 consecutive weeks and received state or federal unemployment compensation during that period.
SNAP (Food Stamp) Recipients
Individuals ages 18–39 who are members of a family that has received SNAP benefits for at least 6 months in the past year.
Ex-Felons
Individuals hired within one year of being convicted of a felony or released from prison for a felony conviction.
Designated Community Residents
Individuals ages 18–39 who reside in an Empowerment Zone or Rural Renewal County.
Vocational Rehabilitation Referrals
Individuals with physical or mental disabilities who have been referred to the employer through a vocational rehabilitation program.
SSI Recipients
Individuals who received Supplemental Security Income (SSI) benefits for any month ending within the 60-day period ending on the hire date.
Summer Youth Employees
Youths ages 16–17 who reside in an Empowerment Zone and are employed between May 1 and September 15.
Long-Term Family Assistance Recipients
Members of a family that has received TANF (Temporary Assistance for Needy Families) for at least 18 consecutive months.
How Much Is the Credit Worth?
The credit amount depends on the targeted group, the employee's hours worked, and their qualified wages:
Per qualifying veteran with a service-connected disability who has been unemployed for at least 6 months.
Per qualifying veteran with a service-connected disability (shorter unemployment period).
Per qualifying veteran who is not disabled but meets other criteria.
Per qualifying non-veteran employee who works at least 120 hours in the first year.
Per long-term family assistance recipient (TANF), spread over two years of employment.
The Certification Process
To claim the WOTC, employers must complete a two-step pre-screening and certification process before or on the employee's first day of work:
Pre-Screen the New Hire
Complete IRS Form 8850 (Pre-Screening Notice and Certification Request) with the new employee on or before their first day of work.
Submit to State Workforce Agency
Send Form 8850 along with ETA Form 9061 or 9062 to your State Workforce Agency (SWA) within 28 days of the employee's start date.
Receive Certification
The SWA reviews the application and issues a certification confirming the employee belongs to a qualifying targeted group.
Claim the Credit
File IRS Form 5884 with your annual tax return to claim the credit for all certified employees who met the minimum hours requirement.
Why Work With Chambers & Company?
- We manage the entire pre-screening and certification process so you never miss a qualifying hire.
- We review your prior hiring records to identify unclaimed credits going back up to three years.
- We integrate with your HR and onboarding workflow to capture every eligible new hire automatically.
- We prepare and file all required IRS and state agency forms on your behalf.
- We work on a contingency basis — no upfront fees, and our compensation is tied to the credits we recover.