As a small business owner, every opportunity to save on expenses while doing good in your community is worth exploring. One such opportunity is the Work Opportunity Tax Credit (WOTC) — a valuable federal tax credit available to employers who hire individuals from certain targeted groups that face barriers to employment.
What Is the WOTC?
The Work Opportunity Tax Credit is a federal tax credit that businesses can claim when they hire individuals from specific groups who have historically faced challenges finding employment. It’s a win-win: you strengthen your workforce with talented individuals and potentially reduce your federal income tax liability.
But don’t wait — the WOTC is currently authorized only through December 31, 2025.
Important Details You Should Know
Before you start factoring WOTC into your hiring plans, here are some key things to keep in mind:
-
The credit is limited to the amount of federal tax owed by the employer — it’s not a direct payment or refund.
-
Employers cannot receive cash or reimbursement for unused portions of the WOTC.
-
The WOTC is filed as part of your general business credit on your federal tax return.
How to Claim the WOTC
Claiming the WOTC involves a few important steps and deadlines:
-
Pre-Screen Before the Job Offer
Employers must first pre-screen applicants to determine if they belong to a targeted group. This is done using IRS Form 8850.
-
Submit Certification Request
After pre-screening, employers must submit a certification request to their state workforce agency within 28 days of the individual’s start date.
-
Hire and Retain the Employee
The credit is only available after the individual is hired, and the amount of credit depends on how long the employee stays and how many hours they work.
Who Qualifies as a Targeted Group?
WOTC supports the hiring of individuals from several targeted groups, including:
-
Veterans
-
People with disabilities
-
Justice system-affected individuals (such as those previously incarcerated)
At Talents ASCEND, we proudly support employers in hiring from these and other targeted groups through our inclusive, skills-based platform. We believe in leveling the playing field and helping you build a stronger team — while also helping you take advantage of programs like the WOTC.