The Work Opportunity Tax Credit (WOTC) is a federal tax incentive designed to encourage employers to hire individuals from groups that face barriers to employment.
This beginner-friendly guide explains who qualifies for WOTC, how much credits are worth, and how employers can maximize their benefit.
Free Resource: Rockerbox offers a Free WOTC Optimization Audit to uncover missed credits and boost cash flow.
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What is the Work Opportunity Tax Credit (WOTC)?
WOTC provides a federal income tax credit of $2,400–$9,600 per eligible employee to employers who hire from designated target groups. It helps:
- Reduce employer tax liability
- Incentivize workforce diversity
- Increase cash flow
According to the IRS WOTC program page, employers must submit proper forms to claim credits within 28 days of the employee’s start date.
Who Qualifies for WOTC? (Target Groups)
Employers can claim credits for eligible hires from the following groups:
- Veterans (including those receiving SNAP or with service-related disabilities)
- SNAP recipients (food assistance)
- TANF recipients (Temporary Assistance for Needy Families)
- Ex-felons
- Long-term unemployed individuals
- Vocational rehabilitation referrals
- SSI recipients
- Summer youth hires in empowerment zones
How Much is WOTC Worth?
- General range: $2,400–$9,600 per eligible hire
- Factors affecting credit: Hours worked, Wages paid, Target group classification
Example: A staffing agency hires 30 workers, 12 of whom qualify for $2,400 credits = $28,800 in tax savings.
How to Apply for WOTC
- Screen new hires using IRS Form 8850.
- Submit Forms 8850 & 9061 to the State Workforce Agency within 28 days of the hire date.
- Track certification from the state.
- Claim the credit on your federal tax return.
Common mistake: Missing the 28-day deadline → automatic disqualification.
Why Employers Miss Out on WOTC Credits
- Not screening all new hires
- Low certification yield due to poor follow-up
- Missed deadlines
- Providers focused on compliance, not ROI
Rockerbox solves these challenges with automation, state agency follow-up, and AI-powered optimization, ensuring you capture up to 40% more credits.
Free WOTC Optimization Audit
Think your provider is capturing everything? Let’s prove it. With Rockerbox’s Free WOTC Audit, you’ll discover:
- Missed credits
- ROI improvement opportunities
- How Rockerbox compares to ADP, Equifax, and Experian
Schedule A Call Request A WOTC Audit
FAQs
What is the purpose of WOTC?
WOTC encourages employers to hire individuals from targeted groups that face barriers to employment while reducing federal tax liability.
How much can WOTC save my business?
Employers typically earn between $2,400 and $9,600 per eligible hire, depending on wages, hours, and target group.
Which industries benefit most from WOTC?
Industries such as restaurants, staffing agencies, healthcare, retail, and manufacturing see the largest ROI due to frequent eligible hires.
How does Rockerbox improve WOTC results?
Rockerbox increases certification yield through automation, compliance tracking, and proactive follow-up, boosting ROI by up to 40%.