The Work Opportunity Credit (WOTC) equals 40 percent of the qualified first-year wages to individuals who are members of a targeted group, not exceed $6,000 per year ($12,000, $14,000 or $24,000 per year for certain qualified veterans. The WOTC reduces the employer’s wage deduction dollar for dollar.
The PATH Act extended the WOTC retroactively for 2015 and through 2019 and expanded “targeted group” of individuals. The PATH Act was amended and expanded to include long-term unemployment recipients hired on or after January 1, 2016, and for qualified tax-exempt organizations that hire qualified veterans.
An employer must obtain certification that an individual is a member of a targeted group before the employer may claim the WOTC. To qualify for the WOTC, employers must:
- On or before the day the individual begins work, the employer obtains certification from the designated local agency (DLA) that the individual is a member of a targeted group; or
- The employer completes a pre-screening notice (IRS Form 8850) on or before the day the individual is offered employment and submits such notice to the DLA to request certification not later than 28 days after the individual begins work.
- To request certification from a DLA, an employer submits IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to the DLA no later than the 28th day after the day an individual who is a member of a targeted group begins work for the employer.
- An employer also must submit a Department of Labor Employment and Training Administration (ETA) Form 9061 (Individual Characteristics Form) or 9062 (Conditional Certification) to the DLA.
Employers need additional time to comply with the requirements to file IRS Form 8850 and ETA Forms 9061 and 9062 request certification by the DLAs. Employers are encouraged to submit both the IRS Forms 8850 and the ETA Forms 9061 or 9062 together in the same submission.
- An employer that hired or hires a member of a targeted group who began or begins work for that employer on or after January 1, 2015, and on or before May 31, 2016, will be considered to have satisfied the requirements if the employer submits the completed IRS Form 8850 to the DLA to request certification no later than June 29, 2016.
- An employer that hires a member of a targeted group including a long-term unemployment recipient, who begins work for that employer on or after June 1, 2016, must submit the completed IRS Form 8850 to the DLA to request certification within standard 28-day deadline.
If you have any questions as to how this may impact your or your company, reach out to us online by clicking here, or call 513-241-8313 to speak with a member