The Work Opportunity Tax Credit (WOTC)

What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that reduces the federal tax liability of any for-profit employers. The WOTC is part of the tax incentive services that PayPros, Inc., through Paradigm Partners, is now offering. Employers benefitting from the Work Opportunity Tax Credit can hire from eleven different targeted groups:

work opportunity tax credit

  • Qualified Temporary Assistance to needy Families Recipients (TANF)
  • Qualified Veterans/Disabled Veterans
  • Unemployed Veterans
  • Qualified Ex-felons
  • Qualified Designated Community Residents (DCR) residing in an Empowerment Zone (EZ), Renewal Community (RC), or in a Rural Renewal County (RRC)
  • Qualified Vocational Rehabilitation Agency Referrals
  • Disconnected Youth
  • Qualified Summer Youth (SY)
  • Qualified Food Stamp Recipients (FS)
  • Qualified Supplemental Security Income Recipients (SSI)
  • Qualified Long-Term Family Assistance Recipients (LTFAR)
  • Maximum Credit Available

  • $1,200 for each new Summer Youth* hired
  • $2,400 for each new Adult hired
  • $4,800 for each new Disabled Veteran hired
  • $9,000 for each new Long Term Family Assistance Recipient hired over a two year period
  • *The credit is based on 40% of up to $6,000 in qualified wages during the first year of employment. Summer Youth qualify for 40% of the first $3,000 in wages during the required working period of May 1 through September 15.

    Minimum Employment or Retention Period

    All new employees must work a minimum of 120 hours and individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, before an employer is eligible to claim the tax credit. Recent program changes took place in 2007 that impacted multiple target groups. One such change was the consolidation of the Welfare-To-Work Tax credit program into the WOTC program to become known as Long-Term Family Assistance and a second change was the creation of the new Disabled Veteran target group that went into effect May 25, 2007. On February 17th as part of the American Recovery and Reinvestment Act (ARRA) of 2009 two new categories were created Unemployed Veterans and Disconnected Youth.

    The WOTC Program has been reauthorized until August 31, 2011

    Long-Term Family Assistance Recipients who began work after December 31, 2006 and before September 1, 2011, can earn employers up to $9,000 if they are a member of a family:

  • That received TANF for at least 18 consecutive months before the hire date
  • Whose TANF eligibility under federal or state law expired after August 5, 1997 (for applicants hired within two years after their eligibility expired)
  • That received TANF for at least 18 months, beginning after August 5, 1997, and is hired not more than two years after that 18-month period
  • Disabled Veterans

    who began work after May 25, 2007 and before September 1, 2011, can earn employers up to $4,800 if they:

  • Are entitled to compensation for a service-connected disability of at least 10%
  • Have aggregate periods of unemployment during the 1 year period ending on the hiring date which equal or exceed 6 months

  • For a Cost Free Analysis contact David Keenan (888) 693-4611 (direct line), or fill out the form below:

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    For a Cost Free Analysis contact David Keenan (888) 693-4611 (direct line), or fill out the Contact form at the bottom of the page.