Work Opportunity Tax Credit (WOTC)

As of December 31, 2013, the Work Opportunity Tax Credit program is under an "authorization lapse" and is currently awaiting re-authorization. During the authorization lapse, WOTC will continue to accept applications in anticipation of reauthorization. We strongly encourage employers to continue sending in their applications on time.

Wisconsin's WOTC unit will be sending out "tentative" determinations regarding approvals during this lapse period. These will indicate whether the application has been certified or denied, but that determinations are not official until the program is reauthorized.

What is the Work Opportunity Tax Credit (WOTC)?

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit designed to help people gain on-the-job experience and acquire better employment. The WOTC program offers federal tax credits to employers as an incentive to hire people in several specific target groups.

Who qualifies for the WOTC?

WOTC applies only to new employees. The new employee must belong to one of the following nine target groups:

How Much Does an Employer Save with WOTC?

Employers can claim up to 40% of the first $6,000 in qualified first-year wages for a maximum credit of $2,400 per new hire.

Calculation of WOTC tax credit

The tax credit for WOTC new hires except LTFA is:

For Long-Term Family Assistance -- tax credits can be earned for the first two years of employment, wages are capped at $10,000:

No credit allowed for employees who work less than 120 hours.

How does an employer apply for the credits?

1. Complete BOTH SIDES of the IRS Form 8850, "Work Opportunity Credit Pre-Screening Notice and Certification Request". The job applicant should complete the front side, and the employer or representative must complete the back side of the form on or before the job offer date.

The 8850 form must be complete in every detail.

Note: This document must be mailed to the WOTC Office at the DWD address below within 28 days of the job start date or the application will be denied (no exceptions).

The IRS requires original signatures, therefore, no faxes or photocopies of the forms are allowed. (IRS Form 8850)

2. Complete the ETA Form 9061 (Individual Characteristics form) if the job applicant does not have a completed ETA Form 9062 from a service provider. Client service providers may provide job applicants with ETA Form 9062, "Conditional Certification", identifying them as a member of a WOTC target group.

Job applicants would then give this form to the potential employer to complete their portion of the form.

Where to get documentation  (Conditional Certification)

Many applicants have documentation of their eligibility; others may obtain confidential documentation about themselves from the relevant government or private non-profit service agency,

OR

You can ask the local agency (Job Placement, Counselor, Social Worker, Parole Officer, etc.) who has provided services to the applicant, to sign the Conditional Certification. When a conditional certification is obtained, no other documentation is required.

Agencies having signature authority

Any representative of the Department of Workforce Development; Job Centers, DVR or County Departments of Social Services or grantee agencies of the department. The Department of Corrections staff as well as many local agencies has authority to sign WOTC Conditional Certifications for their eligible clients.

3. Return all completed forms: IRS 8850 and Individual Characteristics ETA Form 9061 or if you received a completed Conditional Certification  ETA Form 9062 to your local Job Center or mail to:

Department of Workforce Development (DWD)
Federal Tax Credits, Rm. G100
201 E. Washington Ave., PO Box 7972
Madison WI 53707-7972

How to Claim the WOTC Tax Credit?

You file for the credit when you fill out your annual Business Federal Income Tax Forms. In addition to these forms, you will need an IRS 5884 Form and the Tax Credit Certification issued to you by the Wisconsin Department of Workforce Development Tax Credit Unit.

Any questions regarding the filing of the tax credit with the IRS may be addressed to the IRS website or their help line at 1-800-829-1040.

Questions and Assistance

For assistance contact your local Wisconsin Job Center.