Answer:

Yes. The work opportunity tax credit (WOTC) provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs.

The Taxpayer Certainty and Disaster Tax Relief Act of 2019 extended the ability to claim the WOTC for members of targeted groups that begin working for the employer after December 31, 2019, and before January 1, 2021. Generally, the WOTC is equal to 40 percent of the qualified wages paid to a targeted group employee who performs at least 400 hours of service during his or her first year of employment with the employer.

You must obtain certification from your state employment security agency that an individual is a targeted group member before you claim the credit. Generally, you obtain certification by submitting Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit to the state employment security agency. You must submit the form not later than the 28th day after the individual begins work for you. 

Newly hired individuals from the following targeted groups might qualify you for this tax credit:

  • A long-term family assistance recipient.
  • A qualified recipient of Temporary Assistance for Needy Families (TANF).
  • A qualified veteran.
  • A qualified ex-felon.
  • A designated community resident.
  • A vocational rehabilitation referral.
  • A qualified summer youth employee.
  • A qualified Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient.
  • A qualified SSI recipient.
  • A qualified long-term unemployment recipient.

Calculate the credit by completing Form 5884, Work Opportunity Credit and filing with your tax return or on Form 3800, General Business Credit, as appropriate. If you're a qualified tax-exempt organization, calculate and claim the credit by completing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. See the Instructions for Form 5884 and the Instructions for Form 5884-C (PDF).

 

Additional Information:

Subcategory: