WOTC

Work Opportunity Tax Credit 1.800.695.6879

Work Opportunity Tax Credit

Revised and Extended Until 08/31/2011 by: Small Business and Work Opportunity Tax Credit Act of 2007

Expanded by: American Recovery & Reinvestment Act of 2009

Administered in all 50 States In Texas, by: Texas Workforce Commission

Work Opportunity Tax Credit (continued)

Improves the Employment Prospects of Disadvantaged Individuals

and

Provides a Tax Incentive for the Prospective Employer

Is a Federal Income Tax Credit that reduces the federal tax liability of ‘private for profit’ Employers.

To qualify, Employers must hire eligible individuals from any one of nine different target groups.

Work Opportunity Tax Credit (continued)

Nine Target Groups

1. TANF Recipient 2. Veteran / Disabled Veteran 3. Ex-Felon 4. Designated Community Resident 5. Vocational Rehabilitation Referral 6. Summer Youth 7. Food Stamp Recipient 8. SSI Recipient 9. Long-Term Family Assistance Recipient

1. TANF Recipient

Qualifications:Qualifications: Member of a family that received TANF benefits for any 9 of the last 18 months.

Documentation:Documentation:

TANF case history from the Human & Health Service Commission (HHSC).

Applicant must have received at least one of the nine cash payments in TANF during the previous 18 months.

2. Veteran

Qualifications:Qualifications:Military Veteran who served at least 180 days of active duty time; has not been on active duty during the 90 days after the hire date; member of a family that received food stamps for at least 3 consecutive months within the last 15 months.

Documentation:Documentation:Military Discharge Form DD214 Food Stamp record from (HHSC)

Applicant must have received at least one of the three consecutive FS payments.

2. Disabled VeteranQualifications:Qualifications:Military Veteran who is entitled to “compensation” for a “service-connected” disability, and having a hire date which is not more than 1 year after having been discharged or released from active duty in the Armed Forces of the United States, or having aggregate periods of unemployment which equal or exceed 6 months during the 1 year period ending on the hiring date. Documentation:Documentation:Military Discharge Form DD214 Military Disability Rating Letter

Applicant must be entitled to at least 10% Disability Compensation.

3. Ex-FelonQualifications:Qualifications: Was convicted of a felony or released from prison in the past year.

Documentation:Documentation: Correctional Institution records or Court records that show the most recent felony conviction or release from prison date.

or: State/Federal Inmate ID# or: Probation/Parole Officer N/Ph

Indv. convicted of a felony while in Mil. Serv. qualify w/in 1 yr. of release from incarceration in a Disciplinary Barracks..

3. Ex-Felon (continued) Convicted of a felony:Convicted of a felony: Placed on Probation. Conviction Conviction

datedate w/in 1 year of hire.

Charged with a felony:Charged with a felony: Placed on Deferred Adjudication. Deferred Adjudication date Deferred Adjudication date w/in 1 year of hire.

Released from prison: Released from prison: Most recent release from confinement as a result of a felony conviction. Release dateRelease date w/in 1 year of hire.

Inmates participating in the Work Release prog. performing work inside /outside the penal institution qualify for the WOTC .

4. Designated Community Resident

Qualifications: Qualifications:

Is between the ages of 1818 and 3939 on hiring and lives in a Texas Empowerment Zone or Renewal Community or Rural Renewal County (EZ/RC/RRC).

Documentation:Documentation:

Proof of age and residence.

* Texas EZ / RC / RRC Zones

Empowerment Zones / Renewal Communities Empowerment Zones / Renewal Communities located in:located in: El Paso, El Paso County, Middle Rio Grande Valley, San Antonio, Corpus Christi, Rio Grande Valley - Cameron, Hidalgo, Starr, Willacy Counties. Rural Renewal Counties:Rural Renewal Counties: Any county outside a metropolitan statistical area that had a net population loss during the 5-year periods (1990-1994, 1995-1999).

In Texas, there are 50 Rural Renewal Counties.

5. Vocational Rehabilitation Referral

Qualifications: Qualifications: Referred by a State Rehabilitation Agency or an Employment Network approved by the State of Texas (SWA) or the Department of Veterans Affairs.

Documentation:Documentation: Must show the Individual is receiving or has received services and has an (IEP) Individualized Plan of Employment on file that was either initiated, terminated, or last serviced within 24 months of hire.

6. Summer Youth

Qualifications:Qualifications:

Is hired between May 1st. and Sept. 15th.

Is between 16 and 17 years of age at the time of hire and resides in an (EZ/RC) area.

Documentation:Documentation: Proof of age and residence.

7. Food Stamp Recipient

Qualifications:Qualifications: Is between the ages of 1818 and 3939 on hiring and is a member of a family that received food stamps for six consecutive months prior to hire or is an able-bodied adult without dependents (ABAWD) whose benefits terminated, but received food stamps for at least three of the last five months.

Documentation:Documentation: Proof of age and food stamp benefit history from (HHSC) the Human and Health Service Commission.

Applicant must have received at least one of the six payments in food stamps.

8. SSI RecipientQualifications:Qualifications:

Must have received Supplemental Security Income (SSI) for any month during the 60 days prior to the hire date.

Documentation:Documentation: Supplemental Security Income records from the Social Security Administration (SSA)or Human & Health Services Commission (HHSC).

9. Long-Term Family Assistance Recipient

Qualifications:Qualifications: Member of a family that received TANFTANF benefits for at least 18 consecutive months ending on the month of hire, or received any 18 months beginning Sept. ’97 with the 18th month payment falling within 2 years of hire, or whose eligibility expired under a Federal or State law within 2 years of hire.

Documentation:Documentation: Benefit Record from the Health & Human Services Commission.

Applicant must have received at least 1 of the cash payments in TANF during either the 18 or 24 month period.

Unemployed Veteran

Qualifications:Qualifications:Veteran was discharged on/after 09/01/2001 but prior to 12/31/2010

and has received unemployment compensation for at least 4 or more weeks during the year leading up to the hire date. Additional Target Group based

on the American Recovery & Reinvestment Act of 2009

Disconnect Youth

Qualifications:Qualifications:Applicant is between the ages of 16 and 24 on the hire date; has not regularly attended a secondary, technical, or post-secondary school during the six months prior to the hire date; and, is not readily employable by reason of lacking a sufficient number of basic skills. Additional Target Group based

on the American Recovery & Reinvestment Act of 2009

How To Calculate The Credit

Two Tiered Credit Based On Retention.

Hours Worked % $ Earned

Tier 1: Employee Works from 120 to 399 Hours

Credit equal to 25%25% of qualified First-Year Wages.

Qualified First-Year Wages capped at $6,000$6,000.

Maximum Credit: $1,500$1,500 for all target groups (1-9) except Summer Youth. (Wages: $3,000 Maximum Credit: $750)

Tier 2: Employee Works 400 Hours or More

Credit equal to 40%40% of qualified First-Year Wages.

Qualified First-Year Wages capped at $6,000$6,000.

Maximum Credit: $2,400$2,400 for all target groups (1-8) except Summer Youth. (Wages: $3,000 Maximum Credit: $1,200) Use IRS form 5884 IRS form 5884 when applying for

the credit on Income Tax Return. 1st yr. wages may fall in 2 tax yrs.

Tier 1: Disabled Veteran Works 120 to 399 Hours

Credit equal to 25%25% of qualified First-Year Wages.

Qualified First-Year Wages capped at $12,000$12,000.

Maximum Credit: $3,000$3,000.

Tier 2: Disabled Veteran Works 400 Hours or More

Credit equal to 40%40% of qualified First-Year Wages.

Qualified First-Year Wages capped at $12,000$12,000.

Maximum Credit: $4,800$4,800.

WOTC: TG. 9 LT-FAR Credit Long-Term Family Asst. Recipient The W/W provisions are merged into the WOTC

creating a new WOTC target group (LT-FAR) which retains the statutory definition and a more generous tax credit over a two (2) year periodtwo (2) year period.

Maximum two year tax credit of $9,000$9,000.

Retention Period = 400 Hours400 Hours

Minimum retention period calculated in the same manner as for the WOTC

Tax Credit: First Year Credit is equal to 40%40% of qualified First-Year

Wages.

Qualified First-Year Wages are capped at $10,000$10,000.

Maximum Credit = $4,000$4,000.

Retention Period: 400400 hrs.

Tax Credit: Second Year Credit is equal to 50%50% of qualified Second-

Year Wages.

Qualified Second-Year Wages are capped at $10,000$10,000.

Maximum Credit = $5,000$5,000. Use IRS form 5884IRS form 5884 when applying for the credit on Income Tax Return. 1st. / 2nd. yr. wages. may fall in 3 tax yrs.

Application Process: Step 1. Complete IRS Form 8850

Complete by day of job offer. Mail no later than 2828 Days

after new hire’s start date. Original Signatures required

Applicant & Employer.

IRS 8850

ORIGINAL SIGNATURES

28 DAY PSMK

Application Process: Step 2. Complete ETA Form 9061

Signature required from Applicant or Employer.

Individual Characteristics Form provides the employer with an idea of the applicant’s eligibility status.

ETA 9061

Signature

Application Process: Step 2. Complete ETA Form 9062

Signature required from Agency Representative, Applicant and Employer.

Conditional Certification Form provides the prospective employer assurance of the applicant’s eligibility status.

ETA 9062

Signature

Agency Code

Conditional Certifications Issued by Participating Agencies to eligible job

seekers as a means of improving their prospects of employment.

Texas Department of Criminal Justice Texas Youth Commission Texas Education Agency Texas Veterans Commission Department of Assistive & Rehabilitative Services

TDC/TYC – RLS INFO DARS – IPE INFO TVC – C.C. D/VET & V/REHAB

12,71612,716 Texas Employers Participated In

WOTC. (1,134 New Employers)

201,797201,797 IRS Form 8850 Received.

Tax Credit Issued In Texas:Tax Credit Issued In Texas: $ 153,898,800.00$ 153,898,800.00

WOTC Statewide Statistics 2008

How To Contact WOTC

1.800.695.68791.800.695.6879

Texas Workforce Commission Web Page @ www.twc.state.tx.us

WOTC Unit / Room 202T 101 E. 15th. Street Austin, TX. 78778 - 0001