Work Opportunity Tax Credit

If you hire workers from one of the eligible groups below, you can receive up to 40% of their first year's wages as a federal tax credit.

What workers are eligible?

There are 11 eligible groups:

1. Qualified recipients of Temporary Assistance to Needy Families (TANF).
2. Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability who:
   • Have a hiring date which is not more than one year after having been discharged or released from active duty OR
   • Have aggregate periods of unemployment during the one year period ending on the hiring date that equal or exceed six months.
3. Ex-felons hired no later than one year after conviction or release from prison.
4. Designated Community Resident - an individual who has attained ages 18 but not 40 on the hiring date who reside in a Renewal Community, or Rural Renewal County.
5. Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network.
6. Qualified summer youth ages 16 through 17 who reside in an Enterprise Community, or Renewal Community.
7. Qualified Food Stamp recipients ages 18 but not 40 on the hiring date.
8. Qualified recipients of Supplemental Security Income (SSI).
9. Long-term family assistance recipients.
10. Unemployed veterans hired after 2008*
11. Disconnected youth*

*For information about qualifying unemployed veterans and disconnected youth, visit www.doleta.gov/business/incentives/opptax/

How much is the credit?

40% of the employees wages up to $6,000. (Up to $12,000 for service-disabled employees; up to $3,000 for qualified summer youth). If the workers is a long term recipient of Temporary Assistance to Needy Families, you can get additional tax credits.

Requirements You must complete the paperwork and establish eligibility BEFORE you hire the employee. Employees must be retained at least 400 hours for the 40% tax credit. If they are retained for 120 to 400 hours, a 25% tax credit is available.

What paperwork is required?

If you find the worker through the state Employment Development Department, they will probably already have certified the worker. All you have to do is complete the employer portion of the Conditional Certification, ETA 9061 and submit it with Form 8850. Otherwise, you will need to complete 9061 Individual Characteristics Form as well.

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