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The three-year extension adds some certainty to the program and gives employers more space to embed WOTC-strategic hiring practices into their operations.

Tax strategies

WOTC Extended Through 2019; 28-Day Filing Period Kicks In

  • Jennifer Rohen
  • 11/30/2016

If your organization takes advantage of the Work Opportunity Tax Credit (WOTC) program (or would like to), you’ll be glad to know that Congress extended it for another three years; you can claim the credit on qualified candidates who you hire through December 31, 2019. This level of reliability means you can design your WOTC-strategic recruiting, hiring, and onboarding practices beyond a single-year period.

Watch our short video to see how you can reduce your tax liability with WOTC.

WOTC encourages employers to hire people who typically have difficulty entering the workforce, such as ex-felons and some veterans. (See the full, current list below.) The credit ranges from $2,400 to $9,600 for each qualifying employee.

Revolving 28-day filing period now in effect

To claim the credit, you must submit the required paperwork within 28 days of the qualified new hire’s first day of work. File Form 8850 and Form 9061 with the appropriate state workforce agency.

Because of the timing of the tax extender bill, there was a brief period where employers had until September 28, 2016, to file documents and claim the credit both currently and retroactively. Now that this transition relief period is closed, the program reverts to its original 28-day deadline from each employee’s start date.

Pool of qualified candidates expanded to included long-term unemployed

The list of WOTC-eligible new hires now includes long-term unemployment recipients. “Long-term” means a minimum of 27 consecutive weeks without employment, and the candidate must have received unemployment benefits during a portion of that period. Like many of the other qualifying categories, the maximum tax credit for hiring long-term unemployment recipients is 40 percent of the first $6,000 of wages.

All qualified employees are certified by state workforce agencies as members of targeted groups defined under IRC Section 51(d)(1-9). The list includes the following:  

  • Long-term unemployment recipients
  • Qualified veterans
  • Ex-felons
  • Designated community residents
  • Vocational rehabilitation referrals
  • Summer youth employees
  • Supplemental Nutrition Assistance Program Benefits (SNAP) recipients
  • Supplemental security insurance recipients
  • Long-term family assistance recipients

How we can help

Employers who wish to take advantage of WOTC credits are often deterred by the cumbersome amount of paperwork involved. This barrier to participation can usually be resolved by embedding a few WOTC screening questions into your employee onboarding process. We can help you do that, as well as determine whether the credit applies to your organizational situation. We’re also available to assist with the filing, reporting, and preparation of tax forms related to claiming the WOTC credit.