
Get Your Work Opportunity Tax Credit
What is the Work Opportunity Tax Credit?
A federal tax credit for employers to incentivize hiring applicants with barriers to employment. Qualification rates for the credit within transportation and skilled trades are estimated to be as high as 25%.
How is the credit calculated?
New hires working a min of 400 hours apply a 40% credit on 1st year wage base:
New hires working < 400 but > 120 hours apply a 25% credit on 1st year wage base:
1st year wage base of $6,000, $12,000, $14,000 or $24,000 depending on their target group
Applicants only eligible for the credit on their 1st hiring (no re-hires)
How is the credit taken?
Include the IRS pre-screening certification in your onboarding preemployment application process and complete an Individual Characteristics Form
Submit the forms to a State Workforce Agency (SWA) within 28 days of start of work
Request SWA to certify employee is a member of a target group
The credit is a general business credit taken on the federal income tax return
The credit is amount is calculated on IRS form 5884 with the results reported to form 3800 for adjustment before the final credit reaches the income tax return.
Taxable employers can carry back the credit 1 year or forward 20 years.
Who is qualified for the credit?
Recipient of state Temporary Assistance for Needy Families (TANF)
Qualified veteran
Qualified ex-felon
Designated community resident (DCR)
Vocational rehabilitation referral
Qualified summer youth employee
Supplemental Nutrition Assistance Program (SNAP) recipient
Qualified Supplemental Security Income (SSI) recipient
Long term family assistance (TANF) recipient
Long term unemployment recipient
Contact NECS today to learn more!