Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have faced significant barriers to employment. The regulations are set by the IRS and the U.S. Department of Labor and are administered by Connecticut Department of Labor (CTDOL).

Program Updates:

Congress has re-authorized the WOTC program from January 1, 2021 through December 31, 2025.

The U.S. Department of Labor’s Training and Employment Guidance Letter (TEGL) 16-20, Change 1, provides updated WOTC Procedural Guidance effective February 20, 2024.

Connecticut Department of Labor WOTC implementation policies and details about WOTC targeted groups that require supporting documentation may be found here (CTDOL Policy and Procedural Guidance).

How Does WOTC Benefit Your Business?

You may receive a tax credit that ranges from $1,200 - $9,600 depending on the target group of the individual hired and this tax incentive:

Could be worth thousands of dollars to your business
There is no limit on the number of people you can hire under this program
Offers minimal paperwork, but maximum benefits
WOTC is a direct deduction from your federal tax liability

Tax exempt 501c businesses can benefit from a reduced tax credit if they hire a qualified veteran and they qualify under § 501(a) ("qualified tax-exempt organizations"). WOTC is a one-time tax credit for hiring and retaining individuals from these target groups:

Veterans - Tax Credit Amount, (Up to a maximum of):

Veteran receiving SNAP - $2,400 (1st year only, qualified wages of $6,000)
Disabled Vet receiving compensation for service-connected disability - $4,800 (1st year only, qualified wages of $12,000)
Disabled Vet receiving compensation for service-connected disability and unemployed for 6 months - $9,600 (1st year only, qualified wages of $24,000)
Unemployed Vet 4 weeks - $2,400 (1st year only, qualified wages of $6,000)
Unemployed Vet 6 months or more - $5,600 (1st year only, qualified wages of $14,000)

Other Categories - Tax Credit Amount, (Up to a maximum of):

Temporary Assistance to Needy Families (TANF) recipient - $2,400 (1st year only, qualified wages of $6,000)
Supplemental Nutritional Assistance Program (SNAP) - $2,400 (1st year only, qualified wages of $6,000)
Ex-Felon - $2,400 (1st year only, qualified wages of $6,000)
Designated Community Residents - $2,400 (1st year only, qualified wages of $6,000)
Vocational Rehabilitation Referral - $2,400 (1st year only, qualified wages of $6,000)
SSI and Ticket to Work - $2,400 (1st year only, qualified wages of $6,000)
TANF recipient - $2,400 (1st year only, qualified wages of $6,000)
Summer Youth - $1,200 (1st year only, qualified wages of $3,000)
Long Term Family Assistance Recipient - $4,000 year one and $5,000 year two (qualified wages of $10,000)
Long Term Unemployment Recipient - $2,400 (1st year only, qualified wages of $6,000)

How Do I Apply?

The Connecticut Department of Labor now has an online WOTC processing system that provides for the automated determination of some target groups. Employers may visit CTHires to create a WOTC account that will allow for the submission of their applications by bulk upload or manual entry.

The required federal forms are generated when using CTHires but may also may be also accessed from the United States Department of Labor’s website. If you do not have access to a computer you can mail the completed package.

WOTC is allowed for first-time hires only – not rehires – and the paperwork has to be postmarked or electronically submitted within 28 days of the start-work date. We suggest you place the Form 8850 in your application package to help you identify potential applicants that may qualify you for this tax credit. This also meets the IRS requirement to have the information provided prior to hire. You will complete the second page of the Form 8850 and also both pages of the Form 9061 (with the employee’s assistance) after the offer of work.

In response to your submitted certification request, the Connecticut Department of Labor will provide a determination letter that either certifies or denies the tax credit. Employers with CTHires accounts may access these determinations online. For their certified new hires, employers will provide the letter, number of hours worked by the employee, and their wages to their accounting professional. How is the Tax Credit Determined?