Work Opportunity Tax Credit for Job Seekers

Overview

The Work Opportunity Tax Credit (WOTC) offers employers tax incentives for hiring individuals from specific populations with historically higher rates of unemployment. If you are a member of a target group, you may improve your chances of being hired by making a potential employer aware that hiring you may result in tax savings for their business.

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Target Groups

The PATH Act amends Section 51(c)(4) of the Internal Revenue Code of 1986 (Code). In summary, Title I—“Extenders,” Subtitle B—“Extensions Through 2019,” Section 142, “Extension and Modification of Work Opportunity Tax Credit,” of this Act, is as follows:

  • Retroactively reauthorizes the WOTC program with all its current target groups, without changes or new provisions, for a five-year period, after December 31, 2014, to December 31, 2019
  • Introduces a new target group, a Qualified Long-Term Unemployment Recipient, which is defined as any individual who is certified by the designated local agency as being in a period of unemployment that:
    • is not less than 27 consecutive weeks; and
    • includes a period in which the individual was receiving unemployment compensation under State or Federal law
  • Provides for an extension of the empowerment zones for a two-year period, from December 31, 2014, to December 31, 2016

Empowerment Zone Target Groups

The Empowerment Zones (EZ) expired 12/31/2016, therefore, both the Designated community resident-EZ subgroup AND the Summer Youth target group are no longer pursuable beginning with hire dates on/after January 1, 2017.  When/If the EZ’s are re-authorized, DOL will provide TEGL guidance regarding the procedures for processing those expired target groups.

Tax credits currently are available for employers who hire in the following categories.

Veteran Groups

Target Group Maximum Tax Credit
Disabled Veterans Veterans with a service-connected disability of 10% or more and who have been unemployed for at least 6 months. $9,600
Veterans with a service-connected disability of 10% or more and who have been discharged or released within the last year. $4,800
Unemployed Veterans Veterans who have been unemployed for at least 6 months. $5,600
Veterans who have been unemployed for at least 4 weeks but less than 6 months. $2,400
Veterans Receiving SNAP Benefits Veterans who are a member of a family that has received Supplemental Nutrition Assistance Program (SNAP) benefits. $2,400

Non-Veteran Groups

Target Group Maximum Tax Credit
Long-Term Family Assistance recipients who are members of a family that has received Temporary Assistance for Needy Families (TANF) benefits for at least 18 consecutive months $9,000
Any of the following:
  • TANF recipients
  • Ex-felons
  • Designated community residents (Empowerment zones expired 12/31/2016)
  • Vocational rehabilitation referrals
  • SNAP (Supplemental Nutrition Assistance Program) recipients
  • Supplemental Security Income recipients
$2,400
Summer Youth program participants who are 16 to 17 years old, work between May 1 and September 15, and live in an empowerment zone (Empowerment zones expired 12/31/2016) $1,200

 

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How It Works

If you are a member of one of these target groups, you may inform prospective employers that they may be eligible for a federal tax credit by hiring you.

If you believe you meet the qualifications for one of the veteran target groups, contact a Texas Veterans Leadership Program (TVLP) representative, who can issue an ETA Form 9062 (Conditional Certification) for you to present to prospective employers, making them aware that hiring you may result in tax savings for their business.

Employers who hire eligible job seekers must complete an IRS Form 8850 and an ETA Form 9061, linked below, and submit both documents to the Texas Workforce Commission’s Work Opportunity Tax Credit Unit within 28 days from the new hire’s start date.

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Contact Information

Job Search Assistance