Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from eligible target groups who are qualified for positions but face significant barriers to employment.

In North Carolina, the Commerce Department’s Division of Workforce Solutions administers WOTC and determines eligibility for the target groups.

The tax credit employers can claim depends upon the target group of the individual hired, the wages paid to that individual in the first year of employment, and the number of hours that individual worked. A business can receive from $1,200 to $9,600 for each eligible employee.

Find more information below:

How to Apply for WOTC Certification

How to Apply for WOTC Certification

Step 1: Complete the IRS Form 8850 “Pre-Screening Notification and Certification Request” Instructions Form 8850

Step 2: Complete the ETA Form 9061 “Individual Characteristics Form.”

 

NC WOTC will also accept ETA Form 9062, Conditional Certification from NC DHHS Vocational Rehabilitation agencies.  Applications with ETA Form 9062 must be mailed with IRS Form 8850 to

N.C. Department of Commerce

Division of Workforce Solutions

Attn: WOTC

4316 Mail Service Center

Raleigh, NC 27699-4316

Step 3: Register as a user at www.ncworkswotc.com. Electronically submit the request to the Division of Workforce Solutions within 28 days of the new employee start date and mail available documentation supporting eligibility of the requested target group. Hard copies of Form 8850 and ETA Form 9061 are retained by employers for their records.

Step 4: Receive electronic determination of certification for eligibility of the WOTC target groups, denial with explanation or request for additional information via the www.ncworkswotc.com user account.  

Filing to Receive WOTC

Filing to Receive WOTC

After receiving a certification, employers may file for the tax credit with the IRS. Generally, an employer elects to take the credit by filing IRS Form 3800 and IRS Form 5884. However, a tax-exempt organization that hires an employee in the WOTC veteran target group should use IRS Form 5884-C. Employers also must meet requirements for the Minimum Employment Period, which is the number of hours required to be worked by the employee – at least 120 hours in the first year of employment – before they can file and qualify for the tax credit.

IRS and Department of Labor Employment and Training Forms What documentation do I need to confirm Veteran and/or Service-Connected Disabilities?

What documentation do I need to confirm Veteran and/or Service-Connected Disabilities?

In an effort to provide timely and accurate determinations of target groups with veteran or service connected disability status, we request support documentation be submitted to our office.  Please submit this documentation for all cases pending determinations (i.e. cases in pending, needs or out-of-state status).   

Sources to confirm veteran status and/ or services connected disabilities include:

Sending support documentation

Documentation containing personal identifying information should not be faxed or emailed via standard email. 

Mail support documentation (please clearly indicate the case number on support documentation and submit the needs letter with documentation for cases in needs status) to:

N.C. Department of Commerce
Division of Workforce Solutions
ATTN: WOTC
4316 Mail Service Center
Raleigh, North Carolina 27699-4316

Send documentation via secure (encrypted) message to candes.smith@nccommerce.com.

Who Qualifies?

Who Qualifies?

Qualified IV-A recipients ($2,400): An individual who is a member receiving Temporary Assistance to Needy Families (TANF) for any 9 months during the 18-month period ending on the hiring date.

Veterans: To be considered a veteran, an applicant must: 1) Have served on active duty in the Armed Forces of the United States for a period of more than 180 days, or have discharged or released from active duty for a service connected disability, and 2) Not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date.

Qualified Veteran Categories

  • Veteran/SNAP ($2,400): Received SNAP benefits for at least a 3-month period during the 15-months ending on the hire date
  • Unemployed Veteran/ 4 Weeks ($2,400): Unemployed for a period or periods totaling at least 4 weeks in the 1-year period ending on the hiring date
  • Unemployed Veteran/ 6 Months ($5,600): Unemployed for a period or periods totaling at least 6 months in the 1-year period ending on the hiring date.
  • Disabled Veteran ($4,800): Entitled to compensation for a service-connected disability and is hired not more than 1 year after being discharged or released from active duty.
  • Disabled Unemployed Veteran ($9,600): Entitled to compensation for a service-connected disability and was unemployed for a period or periods totaling at least 6 months in the 1-year period ending on the hiring date.

Qualified ex-felon ($2,400): An individual who has been convicted of a felony under any federal or state law, and is hired not more than 1 year after the conviction or release from prison for that felony.

Designated community resident ($2,400): An individual who is at least age 18 but not yet age 40 on the hiring date and lives within an empowerment zone (EZ) or rural renewal county (RRC). Currently, no EZs or RRCs are located in NC. 

Vocational Rehabilitation referral ($2,400): An individual who has a physical or mental disability resulting in a substantial handicap to employment and who was referred to the employer upon completion of (or while receiving) rehabilitation services by a rehabilitation agency approved by the state, an employment network under the Ticket to Work program, or the Department of Veterans Affairs.

Summer Youth Employee ($1,200):   Performs services for the employer between May 1 and September 15; AND is at least age 16 but not yet age 18 on the hiring date (or if later, on May 1); AND has never worked for the employer before; AND lives within an empowerment zone.

SNAP Recipient ($2,400): 18-39 years old on the hiring date, and received SNAP benefits for the 6-month period ending on the hiring date; or is no longer eligible for SNAP, but the family received SNAP benefits for at least 3 months of the 5-month period ending on the hiring date.

SSI recipient ($2,400): receiving supplemental security income benefits for any month ending during the 60-day period ending on the hiring date.

Long-term family assistance recipient ($9,000): received TANF payments for at least 18 consecutive months ending on the hiring date; or received TANF payments for any 18 months after August 5, 1997, and the earliest 18-month period beginning after August 5, 1997, ended during the past 2 years; or stopped being eligible for TANF payments because federal or state law limits the maximum period such assistance is payable and the individual is hired not more than 2 years after such eligibility ended.

Qualified long-term unemployment recipient ($2,400): An individual in a period of unemployment that is not less than 27 consecutive weeks and includes a period in which the individual received unemployment compensation under state or federal law.

Who Does Not Qualify?

Who Does Not Qualify?

A tax credit may not be claimed for:

  • Relatives
  • Individuals who have previously worked for the employer
  • Federally subsidized, on-the-job training; however, wages paid after the subsidy expires can qualify for the credit
  • A new employee who works less than 120 hours in the first year of employment

What are the Benefits to the Employer?

What are the Benefits to the Employer?

  • A $1,200 - $9,600 tax credit for each new hire meeting certification and working requirements
  • Employers make the hiring decision
  • No limit to the number of new hires who can qualify for the tax credit
  • Minimal paperwork
  • Electronic application
Where can I get more information about WOTC?

Where can I get more information about WOTC?

N.C. Department of Commerce Division of Workforce Solutions
Attn: WOTC
4316 Mail Service Center
Raleigh, NC 27699-4316
Phone (919) 814-0439

Watch this informative video: NC Work Opportunity Tax Credit Guide for Employers

US Department of Labor Employment & Training Administration