The Work Opportunity Tax Credit (WOTC) provides a tax credit for employers hiring individuals from certain targeted groups including: low-income, vocational rehabilitation referrals, former AFDC recipients, veterans, ex-felons, food stamp recipients, summer youth employees, and SSI recipients. The credit is used to reduce the federal tax liability of private-for-profit employees.

How does it apply to persons with disabilities?
An employer who hires an employee receiving Supplemental Security Income (SSI) or who is a certified vocational rehabilitation (VR) participant may claim the WOTC after certification is received from the State Employment Security Agency (SESA).

What is the amount?
An employer may take a tax credit of up to 40 percent of the first $6,000 in first year wages per qualifying employee. The maximum per employee credit is $2,400 in a given tax year. This credit applies only to employees who work at least 400 hours during the tax year. With respect to qualified summer youth employees, the maximum credit for each is $1,200 (40 percent of the first $3,000 of first year wages.)

What are the minimum employment requirements?
A partial credit of 25% for certified employees who worked at least 120 hours, but less than 400 hours, may be claimed by the employer during a one year period. No credit is available for employees who work less than 120 hours.

How do I claim the credit?
Complete and submit IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits, to your local SESA.

How does it work?

The following steps should be followed.

 The employer determines likely eligibility by including the WOTC Pre-Screening Notice as part of the

      application process.

 The Pre-Screening Notice must be signed by the employer and employee and mailed to the SESA within 21 days after the employee begins work.

 The employer documents eligibility (based on information received from the employee) and submits documentation to the SESA.

 SESA certifies which individuals are eligible for WOTC, and notifies the employer in writing for

      purposes of filing the tax credit.