Work Opportunity Tax Credit for Hiring from Targeted Groups

In an effort to break down barriers to employment created by economic and other hardships, the IRS offers the Work Opportunity Tax Credit (WOTC) to businesses that hire people from 10 target groups that typically face serious barriers to employment. If your business is struggling to fill open positions, don’t overlook these candidates—they could save you between $1,200 and $9,600 each because of this tax credit! You have to act now, though. Current WOTC benefits end for employees hired after Dec. 31, 2019. Legislators are set to consider whether or not to renew the program before the end of the year. H2: Which Target Groups Qualify You for WOTC? Your business can claim the WOTC when it hires candidates from these groups:

• IV-A Recipients – family members receiving Temporary Assistance for Needy Families (TANF) for at least 9 months within the 18 months prior to being hired.
• Veterans – candidates who are military veterans and also meet one of 5 additional requirements. To be claimed, these veterans must
  • have been enrolled in the Supplemental Nutrition Assistance Program (SNAP) for at least 3 months within the first 15 months of being hired, or
  • have been unemployed for a consecutive or non-consecutive minimum of 4 weeks/maximum of 6 months within the year prior to being hired, or
  • have been unemployed for a consecutive or non-consecutive minimum of 6 months within the year prior to being hired,
  • be disabled, entitled to service-connected disability compensation from the military, and hired within the year after being discharged from active duty, or
  • be disabled, entitled to service-connected disability compensation from the military, and unemployed for a consecutive or non-consecutive minimum of 6 months within the year prior to being hired.
• Ex-Felons – candidates hired within the year after a felony conviction or release from prison after a felony conviction.
• Designated Community Residents (DCR) – candidates between the ages of 18 and 40 who reside in certain economically distressed communities and continue to reside there after being hired.
• Vocational Rehabilitation Referrals – candidates with physical or mental disabilities who have completed certain rehabilitation services.
• Summer Youth – candidates between the ages of 16 and 18, who meet DCR requirements, and certain employment period requirements.
• Supplemental Nutritional Assistance Program (SNAP) Recipients – candidates between the ages of 18 and 40 who received SNAP benefits for all 6 months or a minimum of 3 months of the 5 months prior to being hired.
• Supplemental Security Income (SSI) Recipients – candidates who received SSI benefits for at least 1 month within the 60 days prior to being hired.
• Long-Term Family Assistance Recipients – candidates who meet certain TANF requirements within the 2 years prior to being hired.
• Long-Term Unemployment Recipients – candidates who have been unemployed for a minimum of 27 consecutive weeks and received unemployment benefits for at least part of that time period prior to being hired.

Need WOTC Benefits Clarification?  Claiming the WOTC on any of the target groups can be complicated. Plus, some of your current employees may qualify you for benefits retroactively. For more information on the program, please visit the U.S. Government Department of Labor website: https://www.doleta.gov/BUSINESS/INCENTIVES/opptax/. Your business can have confidence in making WOTC claims when your onboarding process includes comprehensive background screening of new hires. Ask ClearStar to help you establish a background screening plan today.

At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.