Work Opportunity Tax Credit – Is your business eligible?

Veterans with disabilities, welfare recipients, youth lacking job skills, ex-felons, and many others who confront special challenges in finding a job can move from lives of dependency to productive careers with the help of the Work Opportunity Tax Credit (WOTC).

The WOTC program offers employers a federal tax credit of up to $9,000 if they hire members of special groups who regularly encounter difficulties in finding a job. The program aims to help those individuals overcome employment obstacles and become successful, taxpaying members of society.

More Californians are turning to this program as unemployment continues to run at high levels – a 30 percent increase in participation last year. The Employment Development Department (EDD) certified 52,868 new hires for WOTC in 2009. Since the program began in California in 1997, 18,919 employers have applied for WOTC and 647,970 workers have been certified for participation.

Tax credits are $1,200 for youths hired for summer jobs, $4,800 for veterans with disabilities, $9,000 for long-term recipients of Temporary Assistance for Needy Families, and $2,400 for other adults.

Federal stimulus legislation enacted last year added two groups to the eligibility list: disconnected youth ages 16 through 24, and unemployed veterans. Qualifying youth must be out of school, out of work, and lacking basic work skills. Veterans qualify if they have recently received unemployment benefits and are hired within five years of leaving the military.

Employers may be eligible to receive the WOTC if they hire qualified applicants from these and other target groups including:

  • Qualified veterans receiving food stamps or veterans with a service connected disability. The hiring must come within a year of discharge from the military.
  • Ex-felons hired within a year of conviction or release from prison.
  • Vocational rehabilitation referrals, including ticket holders.
  • Residents of an Empowerment Zone, Enterprise Community, or Renewal Community, ages 18 through 39.
  • Food Stamp recipients, ages 18 through 39.
  • Recipients of Supplemental Security Income (SSI).
  • Long-term family assistance recipients.

In California, this federal tax credit is administered by EDD. For more information about eligibility factors for employers, visit http://www.edd.ca.gov/WOTC or contact the WOTC Center at 1-866-593-0173.