| Incentive Programs for Business |
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| Work Opportunity Tax Credit |
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Created through the Small Business Job Protection Act of 1996, the Work Opportunity Tax Credit (WOTC) provides employers an incentive to hire certain target group members with barriers to employment. The Small Business and Work Opportunity Act of 2007 (P.L. 110-28) extends the WOTC through August 31, 2011.
How does WOTC work?
Employing qualified target group members can reduce an employer's federal income tax liability. At the end of the tax year, the employer claims a credit of up to $2,400 for most WOTC certified new hires. This is based on 40 percent of up to $6,000 of qualified first-year wages paid to those employed 400 hours or more. For certified employees that worked at least 120 hours but less than 400 hours, the tax credit is 25 percent of wages paid up to a maximum of $6,000.
A maximum of $4,800 in tax credit may be claimed on each WOTC certified disabled veteran, which is based on 40 percent of up to $12,000 of qualified first-year wages paid on those employed 400 hours or more.
An employer may claim up to $9,000 in tax credit for every WOTC certified long-term family assistance recipient. This is based on 40 percent of up to $10,000 of qualified wages paid during the first year and 50 percent of up to $10,000 paid in the second year for qualified long-term family assistance recipients employed 400 hours or more in each year.
Note: A new hire that is a previous employee, dependent, or relative of the employer cannot qualify the employer for the tax credit. Additional questions concerning how the credit could affect your federal taxes can be answered by an accountant or the Internal Revenue Service.
Target groups
- Temporary Assistance for Needy Families (TANF) recipients
- Veterans (recent food stamp recipients and qualified disabled veterans)
- Recently convicted or released ex-felons
- Vocational Rehabilitation referrals/Ticket-to-Work holders
- Food Stamp (FS) recipients 18 through 39 years of age
- Supplemental Security Income (SSI) recipients
- Long-term family assistance recipients
Click here for the list of target groups with minimum eligibility criteria.
How to apply
To qualify for the tax credit, the employer must apply for and receive an Employer Certification. To request certification:
- Have the potential new hire complete page one of the Pre-Screening Notice (IRS Form 8850) by the day of job offer.
- If the new employee indicates potential WOTC eligibility on page one of Form 8850, complete page two of this form.
- Request certification by completing the ETA-9061 form and mailing it with a completed 8850 to the Oregon Employment Department WOTC Unit no later than the 28th calendar day after the employee begins working for you.
Mail these forms within 28 calendar days after the applicant starts work to:
Oregon Employment Department
WOTC Unit, Room 201
875 Union Street NE
Salem, OR 97311
The timeliness of the request is determined by postmark date.
Please note that the timely mailing provision is part of the eligibility criteria for the tax credit. Incomplete applications are not accepted.
If the request is timely and the applicant is eligible, an Employer Certification will be returned to the business authorizing the tax credit.
At the end of the tax year, claim the credit on your WOTC certified employee(s) by completing IRS Form 5884.
Filing reminders
- Form 8850 must be complete with signatures appearing in ink or pencil
- An untimely application will result in the denial of the certification request
- Keep copies of the documents mailed and the determination letter received
Due to the high volume of incoming applications, the WOTC Unit is unable to verify receipt of applications. Use of certified mail or equivalent is recommended for confirming receipt of any application.
Alternative application instructions: If a new hire was issued a Conditional Certification (Form ETA-9062) by a participating agency (e.g., the Job Corps, Office of Vocational Rehabilitation Services), request certification by completing that form and IRS Form 8850. Mail both forms to the WOTC Unit no later than 28 calendar days after the applicant begins working for you. Do not request a Conditional Certification from a participating agency for your potential hire. If the applicant never received or does not have a Conditional Certification, follow the general application instructions using the 8850 and Individual Characteristics Form (ETA-9061).
For a potential WOTC target group member that is about to begin an On-the-Job Training (OJT) program, mail a completed certification request to the WOTC Unit no later than 28 calendar days after the individual begins the OJT experience. The OJT start date is treated as the employment start date when determining Employer Certification eligibility.
For more information:
Visit the U.S. Department of Labor, Work Opportunity Tax Credit Web site:
http://www.doleta.gov/business/Incentives/opptax
Contact the Oregon Employment Department at 1-800-237-3710 ext. 71672, or your nearest Employment Department field office for copies of the IRS Form 8850.
Form 8850 is available from the Internal Revenue Service at: http://www.irs.gov/pub/irs-pdf/f8850.pdf 
Click here for Spanish version.
Click here for U.S. Department of Labor ETA 9061 form
Click here for Spanish version
Viewing these documents requires the Adobe Acrobat Reader, available free.
Fax users may call the U.S. Department of Commerce National Technical Information Services (NTIS) fax-on-demand line for IRS Form 8850 and the ETA-9061 form. Call (877) 828-2050 from a fax machine to use this service.
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| Dependent Care Tax Credit |
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Oregon is among 20 states in the nation that offer a state tax credit for dependent care assistance provided to employees. Oregon´s tax credit permits an employer to offset 50 percent of its child care expenditures against its state tax liability. The credit allows an annual limit of $2,500 per employee.
For more information on the Dependent Care Tax Credit, click here.
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