The WOTC is a federal tax credit available to employers who invest in American job seekers who have consistently faced barriers to employment. Employers may meet their business needs and claim a tax credit if they hire an individual who is in a WOTC targeted group.
Employers must apply for and receive a certification verifying the new hire is a member of a targeted group before they can claim the tax credit. After the required certification is secured, taxable employers claim the WOTC as a general business credit against their income taxes, and taxexempt employers claim the WOTC against their payroll taxes.
BENEFITS TO EMPLOYERS
The credit available ranges from $2,400 up to $9,600, depending on the targeted group and qualified wages paid to the new employee generally during the first year of employment. Generally, the credit is 40% of qualified first-year wages for individuals who work 400+ hours in their first year of employment.
HOW CAN EMPLOYERS FIND JOB CANDIDATES IN WOTC TARGETED GROUPS?
The American Job Centers and partnering agencies and programs can help employers connect with skilled job seekers who may be in a targeted group for the WOTC. American Job Centers (AJCs) can assist employers in recruiting talent, hosting job fairs, conducting skills assessment, and providing support to workers transitioning to new jobs.
Some jobseekers may also be pre-certified as in a WOTC targeted group. This pre-certification can be helpful, but is not required for hiring or claiming the tax credit, and job candidates that may be a good fit for your business and eligible for the WOTC may not have a pre-certification.
The Arkansas Division of Workforce Services can determine whether a job seeker may be in a WOTC targeted group, and note this determination with a Conditional Certification, ETA Form 9062.
The state agency then gives that precertification to the job-ready applicant to use during their job search. The Conditional Certification serves an as official record of WOTC pre-certification by:
Alerting prospective employers to the availability of the tax credit if the individual is hired, and
Providing a means for employers to request a WOTC certification for the job applicant/new hire.
A “participating agency” is a federal, state, county, or local government agency or a grantee of these agencies. Examples of participating agencies may include:
American Job Centers
Vocational Rehabilitation agencies
City and county social service offices
Department of Corrections
Veterans Administration and related service organizations
Workforce Innovation and Opportunity Act (WIOA) grant recipients