WOTC, What is It? Who Qualifies?

Stewart Heath


Published on November 04, 2017

What is WOTC?

WOTC is a Federal tax credit created by the Small Business Job Protection Act of 1996 and the Welfare-to-Work Tax Credit of 1996.  This credit is available to employers who hire and retain from target groups. Employers claim about $1 billion in tax credits each year under the WOTC program. There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit, and there are a few simple steps to follow to apply for WOTC.

Is WOTC the Only Program We Review?

WOTC is a great program to start out with.  But clients will benefit from looking at all Employer Based Tax Incentives.  The next section of this article explains more.  The most notable two programs in addition to WOTC are Section 41 R&D Tax Credit, and the Startup Tax Credits.

What Types of Employees Qualify?  

Virtually any business can now benefit from Employer Based Tax Incentives because even candidates that don't qualify for WOTC often qualify for other tax incentives.

Virtually All Employers in These Industries Qualify for Employer Based Tax Incentives:

·       Manufacturers 

·       Software Companies

·       Producers of Products 

·       Architectural / Engineering / Design Groups

·       Pharmaceutical Companies

·       Labs

·       Startup Companies

·       Companies Performing Technical Functions

How are the Tax Credits Calculated?

Employers for WOTC candidates generally can earn a tax credit equal to 25% or 40% of a new employee's first-year wages, up to the maximum for the target group to which the employee belongs. Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours. The average benefit per employee is $2,400.00.  The other fore mentioned Tax Incentives have their own specific calculation methods of which can be found by running Presentation Pro within the App.

Does My Company Qualify for WOTC?

The only way to know for sure is to schedule a discovery call.  If you want to find out the benefits of a Worker Opportunity Tax Credit screening program (WOTC), simply email me at stewart.heath@harvardgraceadvisors.com or call (888) 350-1188.




How is the WOTC Tax Credit claimed?