Frequently Asked Questions About the Work Opportunity Tax Credit

As Work Opportunity Tax Credit service providers and experts, we get asked many questions regularly about the WOTC. Some of the most common questions received over the past few months:

What is “WOTC”?
Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive for employers to hire from target groups of individuals who have consistently faced significant barriers to employment.

How many people qualify?
Based on our 15 years experience, 10-20% of new hires may be qualified if they are included in the target groups.

What is the amount of the credit available through WOTC?
The amount of the tax credit varies by target group. The tax credit for target groups A, B, C, D, E, G, and H is 40 percent of qualified first year wages up to $6,000. The tax credit for target group I, long-term family assistance recipient, is 40 percent of first year qualified wages up to $10,000 and 50 percent of second year qualified wages up to $10,000. Veterans with a service-connected disability unemployed for at least 6 months the maximum tax credit increased to $9,600.

What is the 28 day rule?
The legislation requires the application for the tax credit is received by the Department of Labor (DOL) within 28 days of the employees hire date.

I hired a Veteran 4 months ago, can I go retro to claim the tax credit?
Unfortunately you can not, you need to apply within 28 days of the hire date.

Does an employee have to live in & work to qualify for the empowerment zone tax credit?
The new employee only has to live in the empowerment zone; however the new employee living in the Empowerment Zone must be between the ages for 18 – 39.

Can I carry forward tax credits not used?
Yes, WOTC tax credits rules are the same as general business credits. You can carry forward unused tax credits for up to twenty (20) years & back one (1) year.

What does CMS do?
At CMS, we automate your application, certification and tracking of the Work Opportunity Tax Credit. We only get paid after we have received the government agency certification and verified that your employees qualify for tax credits. (See more about our WOTC services).

Learn More!

Click on FAQ in our menu to see all of the other frequently asked questions about the Work Opportunity Tax Credit.

Attend a webinar with Tax Credit expert Brian Kelly to learn how you can be taking advantage of this tax credit.

Call CMS to speak to an expert today: 800-517-9099.

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