About the Work Opportunity Tax Credit
Enhance the diversity of your workforce, increase productivity, and strengthen your company culture.
WOTC highlights for employers
- Businesses of any size can participate.
- Minimal paperwork is needed to claim the tax credit.
- You make the final hiring decision.
- You can hire as many qualified job applicants as needed.
- For-profit employers can reduce their federal income tax liability.
- Non-profit employers can reduce their Social Security tax obligation.
Employers who hire individuals from the following groups are eligible to apply for WOTC.
- Temporary Assistance for Needy Families (TANF) recipients
- Supplemental Nutrition Assistance Program (SNAP) recipients
- Supplemental Security Income (SSI) recipients
- Long-term Family Assistance recipients
- Qualified long-term unemployment recipients
- Veterans who have/are:
- Received food stamps under the Supplemental Nutrition Assistance Program (SNAP) for at least 3 months during the 15-month period leading up to their hiring date.
- Been unemployed for at least 4 weeks (whether or not consecutive) but less than 6 months in a one-year period and ending on the hiring date.
- Been unemployed for at least 6 months (whether or not consecutive) in a one-year period and ending on the hiring date.
- Entitled to compensation for a service-connected disability and hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces.
- Entitled to compensation for a service-connected disability and unemployed for periods of time totaling at least 6 months (whether or not consecutive) in a 1-year period and ending on the hiring date.
- Individuals who were formerly incarcerated
- Individuals with disabilities
- Individuals who are in recovery from substance use disorder
- Summer youth employees
About Applying for WOTC
Employers must certify that an individual is a member of a specific target group before claiming the tax credit.
After making a company profile on PA CareerLink®'s website, applying for WOTC is easy and only takes a few steps.
- Complete page 1 of the IRS 8850 form when a job offer is made.
- Complete page 2 of IRS form 8850 after an individual accepts a position.
- Complete ETA 9061 forms within 28 days of a new hire's start date.
- Apply online on PA CareerLink®'s website or sign and send the IRS and ETA forms to Labor & Industry's Tax Credit Services team.
Both IRS forms must be filled out, signed, and stored for four years in case of an IRS audit.
WOTC by the numbers
- You can earn a tax credit equal to 25% or 40% of a new employee's wages in their first year.
- 25% is awarded when employees works at least 120 hours
- 40% is awarded if the employee works at least 400 hours
- You can earn higher tax credits by hiring an individual who receives long-term Temporary Assistance for Needy Families (TANF) for a two-year period.
- 40% is awarded when this employee works at least 120 hours in the first year
- 50% is awarded when this employee works at least 400 hours in the second year
Frequently Asked Questions
The amount that can be claimed depends on which target group the individual is associated with, the employee's first-year wages, and the number of hours the employee worked.
An employer can receive a tax credit equal to 25% of the employee's first-year wages if they work at least 120 hours in the first year.
An employer can receive up to 40% if the employee works at least 400 hours in the first year.
Using the online system significantly reduces processing time, postage fees, and establishes an immediate postmark date for the 28-day rule. The online system also offers a tracking feature.
A WOTC application should be submitted in the state where the company is located.
After you've created a company profile, go to "My Profile," then down to the tab "Tax Credit - Application List" and follow the desk guide to submit your application.
You may upload documents to the application on the website or mail them to L&I's Tax Credit Services unit.
PA Dept. of Labor & Industry
Tax Credit Services
651 Boas Street, 12th Floor
Harrisburg, Pa. 17121-0750
No, you can only receive the WOTC incentive when an employee is first hired and WOTC certified.
The tax credit incentive only goes to the employer and isn’t shared with the employee. The purpose of the program is to help underrepresented individuals gain employment. While it is not a requirement, the Equal Employment Opportunity Commission (EEOC) has issued guidance encouraging employers to submit WOTC applications.
You have the right to appeal an original denial decision.
Your appeal must:
- Be based on new supporting documentation that was not provided with the original application;
- Or, prove that the original denial was based upon the misinterpretation of eligibility information.
The tax credit will apply to the highest-paying target group.