IRS highlights WOTC for employers

IRS highlights WOTC for employers

The IRS is reminding employers to avail of the Work Opportunity Tax Credit (WOTC). The WOTC is generally based on wages paid to eligible workers. Special calculation rules apply for summer youth, veterans and long-term family assistance recipients.


There are different categories of WOTC-eligible workers. The newest category, qualified long-term unemployment recipients, was added effective January 1, 2016. The categories include: qualified IV-A Temporary Assistance for Needy Families (TANF ) recipients; unemployed veterans, including disabled veterans; ex-felons; designated community residents living in Empowerment Zones or Rural Renewal Counties ; vocational rehabilitation referrals; summer youth employees living in Empowerment Zones ; food stamp (SNAP ) recipients; Supplemental Security Income (SSI) recipients; long-term family assistance recipients and qualified long-term unemployment recipients.


To qualify for the credit, an employer must first request certification by filing Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with the state workforce agency. The IRS explained that the WOTC is not available to tax-exempt organizations for most categories of new hires; however, a special rule allows them to claim the credit for hiring qualified veterans. These organizations should claim the credit on Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. (IRS News Release, IR-2018-113, May 4, 2018.)

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