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Temporary Assistance for Needy Families (TANF)
or Medicaid State Tax Refund

How and When to File for State Tax Refund

By using Form TWC 1098, Application for Refund of Taxes Paid to the State of Texas, an employer can apply for a tax refund for wages paid an employee in a calendar year only on or after January 1 and before April 1 of the calendar year following the year taxes and wages were paid.

For example, a refund request for wages paid in calendar year 2010 must be submitted on or after January 1, 2011 but before April 1, 2011.

After the employer and employee complete TWC Form 1098 it is sent to:

Texas Workforce Commission
101 E. 15th Street, Room 332T
Austin, Texas 78778-0001

The Texas Workforce Commission certifies that the employee received TANF or Medicaid benefits. Insurance coverage for the applicant must be provided by the employer or a representative. Those applications meeting both the insurance and TANF or Medicaid requirement are forwarded to the State Comptroller for further verification and a refund, if eligible.

State of Texas Tax Refund for Employers of TANF or Medicaid Clients

An employer may qualify for a state tax refund if he/she:

  • pays certain State of Texas taxes (franchise, state sales and use, boat and boat motor, PUC gross receipts, inheritance, hotel and/or manufactured housing), and
  • pays wages during the first year of employment to an employee who is a Texas resident and received TANF or Medicaid benefits any month within 6 months of the start date, and
  • provides and pays for a part of the cost of qualifying major medical insurance for the employee.

Employers can recover up to 20 percent of $10,000 in wages paid during the first year of employment, which means a refund of up to $2,000 per employee.

For more information about the Work Opportunity Tax Credit, or Temporary Assistance for Needy Families (TANF) or Medicaid State Tax Refund, please call the Texas Workforce Commission WOTC Unit at 1-800-695-6879.

Last Verified: September 30, 2011

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Last Revision: September 30, 2011