Work Opportunity Tax Credit

What it is:

A credit that is claimed on an employer's federal income tax.
A credit of 35% of the first $6,000 paid in wages for each eligible employee.
A credit that applies only to new hires.
The employer must retain the employee for at least 180 days or 400 hours (20 days or 120 hours for summer youth) to claim the credit.
The credit applies only to employees hired into a business or trade. Maids, chauffeurs and other household employees do not qualify for this credit.

The WOTC program is administered at the federal level by the Employment and Training Administration, U.S. Department of Labor, and the Internal Revenue Service (IRS), U.S. Department of Treasury.

Download WOTC forms in Adobe Acrobat® format. Feel free to download the Adobe Acrobat Reader®.

Eligible Job Applicants:

Low income ex-offenders (Economically disadvantaged individuals who have been convicted of a felony or released from a prison in the 12 months prior to hire).
Individuals whose families receive welfare benefits.
Veterans who are receiving either welfare benefits or food stamps.
High risk youth (18-24 years old) who live in a federally-designated empowerment zone or enterprise community (EZ/EC).
Individuals with disabilities who have received state or VA rehabilitation services. High risk summer youth (16-17 year olds), hired between 5/1 - 9/15, who live in an EZ/EC.
18-24 year olds whose families receive food stamps.

How it Works

Employer-Initiated:

The employer and job applicant complete a pre-screen questionnaire, IRS Form 8850, on or before the date the individual starts to work.
The employer and employee complete an Individual Characteristic Form (ETA-9061).
The employer must mail IRS Form 8850 and the ETA-9061 within 21 days of the start to work date to their local Employment Services Office.

Agency Assisted:

A qualified agency issues a conditional certification (ETA-9062) to show that the individual is eligible for the tax credit.
The employer and applicant complete the IRS Form 8850.
The employer completes the employer section of the ETA-9061.
The employer submits the IRS Form 8850 and ETA-9062 within 21 days from the employment start date - no documentation is necessary.

Only Two Simple Forms are Required:

Pre-Screening Form and Request for Certification (IRS Form 8850)
Individual Characteristic Form (ETA-9061) OR Conditional Certification Form (ETA-9062)

For more information, or to obtain copies of the required paperwork, please call the WOTC Program at 303-318-8824 or e-mail cliff.maumenee@state.co.us.