Work Opportunity Tax Credit — Program Overview

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The Work Opportunity Tax Credit (WOTC) is a federal income tax benefit administered by the U.S. Department of Labor (DOL) for private, for-profit employers who hire individuals from specified target populations. WOTC reduces a business’s federal tax liability, serving as an incentive to select job candidates who may be disadvantaged in their efforts to find employment.

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Eligible employers can receive a federal tax credit ranging from $1,200 to $9,600 for each qualified employee hired under the WOTC program, or $9,000 over a two-year period for employees hired who were long-term public benefit recipients prior to hire. Participating employers who receives a WOTC certification will use IRS Forms 5884 and 3800 to claim the Work Opportunity Tax Credit.

The State of Texas Tax Refund for Employers of TANF or Medicaid Clients is another tax benefit for employers. To qualify, an employer must pay certain State of Texas taxes; have paid wages during the first year of employment to a Texas resident who received at least one month of Temporary Assistance for Needy Families (TANF) or Medicaid benefits within six months of the employee start date; and have provided and paid part of a qualifying employee’s HMO health plan, self-funded or self-insured ERISA plan, or a health plan approved by the Commissioner of Insurance.

Under the State of Texas Tax Refund for Employers of TANF or Medicaid Clients program, an employer may receive a refund of up to $2,000 for each qualifying employee hired.

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Authority & Funding

WOTC is authorized by the Small Business and Work Opportunity Tax Act of 2007 (Public Law 110-28).

TWC receives applications for WOTC and makes determinations on whether the employer is eligible for the credit.

The U.S. Department of Labor allocates funds to the states for the administration of the WOTC program.

The State of Texas Tax Refund for Employers of TANF or Medicaid Clients is authorized by Texas Administrative Code, Title 34, Part 1, Chapter 3, Subchapter A, §3.4.

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Service

WOTC contact information
-     Call: 800-695-6879
-     Email: wotc@twc.state.tx.us

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Last Verified: November 26, 2014

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