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Work Opportunity Tax Credit Program (WOTC)

The legislative authority for the WOTC Program has been reauthorized as of May 25th, 2007 expiring August 31, 2011. Program changes for applicants who begin work after May 25th, 2007 include:

• renames the High-Risk Youth target group (D) to Designated Community Residents (DCR's); increases the age from 18-24 to 18-39; establishes and defines the new Rural Renewal County (RRC) to include 50 Texas Counties;
• clarifies statutory definition of "individuals under an IWP" relating to Vocational Rehabilitation Referrals target group (E) from the Ticket To Work Program; and
• expands the definition of the Qualified Veteran target group (B) to include "disabled veterans"

American Recovery and Reinvestment Act - New WOTC Target Groups

The American Recovery and Reinvestment Act expands the WOTC Tax Credit program to include 2 new target groups; Unemployed Veterans and Disconnected Youth. Program changes will be for applicants who began work for an employer on/after January 1, 2009.

Unemployed Veterans will qualify if:

• The Veteran was discharged on/after September 1, 2001, but prior to December 31, 2010; and
• The Veteran has received unemployment compensation for at least 4 or more weeks within a year from the hire date.

Disconnected Youth will qualify if:

• The applicant is 16, but not yet 25 on the hire date and;
• The applicant is not regularly attending a secondary, technical, or post-secondary school during the 6 months prior to the hire date and;
• The applicant is not regularly employed during the 6 months prior to the hire date and;
• The applicant is not readily employable by reason of lacking a sufficient number of basic skills.

An employer must request and receive certification from its state workforce agency (in Texas- the Texas Workforce Commission) that the new hire is a member of one of the target groups before the employer can claim the WOTC on its federal income tax return.

Program changes will go into effect upon receipt of official guidance from the Department of Labor to the Texas Workforce Commission.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit is a federal tax credit used to reduce the federal tax liability of private-for-profit employers. Employers can hire from 9 different targeted groups:

• Employer Information Packet (PDF: 2.7 MB)
• Work Opportunity Tax Credit Brochure (PDF)
• How To Calculate The Credit  (PDF)

• Training and Employment Guidance Letter (TEGL) No. 3-09
• Training and Employment Guidance Letter (TEGL) No. 3-09 Change 1
• Training and Employment Guidance Letter (TEGL) No. 20-06  (PDF)
• Training and Employment Guidance Letter (TEGL) No. 5-07  (PDF)

• IRS Form 8850 "Pre-Screening Notice and Certification Request for the Work Opportunity Credit" (PDF)
• Instructions for Form 8850  (PDF)
• ETA Form 9061 (August 2009) "Individual Characteristics Form" (PDF)
  (required for ALL Disconnected Youth and/or Unemployed Veterans)
  Note: The August 2009 ICF is applicable for ALL WOTC target groups.
• Disconnected Youth Self-Attestation Form (Word) or (PDF)
• IRS Form 2848 "Power of Attorney and Declaration of Representative" (PDF)
  (To be used by Employers utilizing a Consultant)
• Instructions for Form 2848 (PDF)

Long-Term Family Assistance Recipients who began work after December 31, 2006 and before September 1, 2011, can earn their employers up to $9,000 if they are a member of a family:

• that received TANF for at least 18 consecutive months before the hire date: or
• whose TANF eligibility under federal or state law expired after August 5, 1997 (for applicants hired within two years after their eligibility expired); or
• that received TANF for at least 18 months, beginning after August 5, 1997, and is hired not more than two years after that 18-month period.

For more information about the Work Opportunity Tax Credit Program, or Temporary Assistance for Needy Families (TANF) or Medicaid State Tax Refund, please call the Texas Workforce Commission WOTC Unit at 1-800-695-6879.