What Is the Work Opportunity Tax Credit?

The Work Opportunity Tax credit is formerly known as the Targeted Jobs Tax credit. It is a tax credit that is provided to employers who employ targeted work groups. Some of the targeted groups are unemployed veterans, food stamps recipients, ex-felons, Social Security recipients, disconnected youth and summer youth workers. These groups are targeted due to their low-income status. For all eligible participants, the employer receives a tax credit of up to 40% for the first $6,000 in wages that is paid during the first year of employment.

Qualifying

In order for an employer to receive the credit, they must follow the process for certification and ensure that the workers meet the requirements. Eligible workers must work at least 400 hours. Youth workers are the only exception; summer youth must work at least 20 days, or 120 hours.

Employers must pre-screen employee and certify the screening by using the Pre-Screening Notice. Both the employee and employer must sign Pre-Screening Notice and submit to the State Employment Security Agency (SESA). SESA will then certify the documents and send a notice to the employer informing them of the eligibility and approval to claim the tax credit on the approved individuals.

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