Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) program is a federal tax credit that gives employers an incentive to hire workers in target categories.  These target groups are considered individuals that have “significant barriers to employment”.  The program allows employers to take a tax credit based on these factors:

  • Category of workers hired
  • Wages paid to those workers in their first year of employment
  • Hours worked – employees must work at least 120 hours in the 1st year
  • Age of workers – generally between 18 – 39 years old

The categories of workers include:

  • Veterans
  • TANF recipients
  • SNAP Recipients
  • Designated community residents known as Rural Renewal Counties or Empowerments Zones.  One of these counties is Poweshiek County in Iowa.
  • Vocational Rehabilitation Referral
  • Ex-Felons
  • Supplemental Security Income Recipients
  • Summer Youth Employee (living in Empowerment Zones) – 17 & 18 year olds

Employees who do not qualify include:

  • Relatives of employer
  • Former employees

Our team at BakerStarrett LLP is happy to talk with you more about this program and how it can benefit you as an employer.  One final requirement is to file for the credit within 28 days of the start date of the new employee.  Don’t delay and give our office a call at 641.236.8083 to learn how to take advantage of the Work Opportunity Tax Credit.

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