Normally, to qualify for the Work Opportunity Tax Credit (WOTC), an employer must first request certification by filing IRS Form 8850 with the state workforce agency within 28 days after the eligible worker begins work.
But due to the late enactment of the legislation extending the WOTC and its retroactive impact, the IRS gave employers extra time, until Sept. 28, to make requests related to eligible workers hired any time in 2015 and during the first eight months of 2016. That “lookback” period is now closed, and if you did not request certification for 2015/2016 hires, that credit is gone. The regular 28-day rule again applies for any eligible worker hired after Aug. 31, 2016.
The 10 categories of WOTC-eligible workers include:
• Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients Unemployed veterans, including disabled veterans
Qualified veteran. A veteran who is any of the following.
- A member of a family that has received Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date.
- Unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
- Entitled to compensation for a service-connected disability and is hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces.
- Entitled to compensation for a service-connected disability and was unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
• Designated community residents living in Empowerment Zones or Rural Renewal Counties
• Vocational rehabilitation referrals
• Summer youth employees living in Empowerment Zones
• Food stamp (SNAP) recipients
• Supplemental Security Income (SSI) recipients
• Long-term family assistance recipients
• Qualified long-term unemployment recipients (for people who begin work after 2015).
Eligible businesses claim the WOTC on their income tax return. The credit is first figured on Form 5884 and then becomes a part of the general business credit claimed on Form 3800.
Though the credit is not available to tax-exempt organizations for most categories of new hires, a special rule allows them to get the WOTC for hiring qualified veterans. These organizations claim the credit on Form 5884-C. Visit the WOTC page on IRS.gov for more information.