Work Opportunity Tax Credit - A Tool for the Unemployed and the Underemployed
Anyone who has recently been on the hunt for a new gig can tell you landing a job is hard! Now factor in having a barrier to employment like a prior felony, a disability or living in an area without many job opportunities - these elements can make it can seem nearly impossible.
The good news is the Department of Economic Security has many tools to assist job seekers. One tool that too often flies under the radar of job seekers and employers is the Work Opportunity Tax Credit (WOTC). The WOTC is a federal tax credit private sector tax-paying employers can receive for hiring individuals from one of ten available target demographics. It is the federal government's way of rewarding employers who give citizens who historically have struggled a chance to find work.
How does it work?
Employers can receive the tax credit for hiring job seekers from the following ten demographics:
- Unemployed Veterans (Including Disabled Veterans)
- Temporary Assistance for Needy Family (TANF) Recipients
- Long-term TANF Recipients
- Supplemental Nutrition Assistance Program (SNAP, formerly known as Food Stamps) Recipients
- Designated Community Residents who are living in Empowerment Zones or Rural Renewal Counties
- Vocational Rehabilitation referred Individuals
- Ex-Felons
- Supplemental Security Income Recipients
- Summer Youth living in Empowerment Zones
- Long-term Unemployed Recipients
Job seekers from these ten target demographics can use WOTC as a way to market themselves as more desirable to employers. After all, we're talking about a significant amount of potential tax relief for the companies who receive the tax credit.
Just how much credit?
Employers can begin to receive tax credits after the employee has worked a minimum of 120 hours. The amount increases after the employee works 400 hours. Credits can be quite substantial, ranging from $1,200 up to $9,600 per qualified new hire, and employers can receive the tax credit on an unlimited number of new employees.
WOTC is a partnership between the employee and employer that benefits both parties after a little upfront leg work, and is an excellent way to get Arizona's untapped talented job seekers employed. Alternatively, it's a way for employers to capitalize on the employees they may already be hiring.
Please visit the Arizona Work Opportunity Tax Credit program page for more information.
By Jillian Seamans