The Work Opportunity Tax Credit (WOTC) provides a business tax credit of $2,400 up to $9,600 to certain employers who hire workers from certain targeted groups. The WOTC is generally claimed as a credit against income tax, or in the case of Tax-exempt Employers, against their social security tax.
Qualified tax-exempt organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), may claim the credit for qualified veterans who begin work on or after December 31, 2014, and before January 1, 2020.
The credit is claimed against the employer portion of social security tax on wages paid to all employees during the 1-year period beginning on the day a qualified veteran begins working for the organization. The qualified veteran must be performing services in activities related to the purpose or function constituting the basis of the organization’s exemption under section 501.
Qualified Veteran:
A qualified veteran is a veteran certified as any of the following.
• A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date.
• Unemployed for a period or periods totaling at least 4 weeks (whether or not consecutive) but less than 6 months in the 1-year period ending on the hiring date.
• Unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
• Entitled to compensation for a service-connected disability and hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces.
• Entitled to compensation for a service-connected disability and unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
To be considered a veteran, the individual must:
• Have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability, and
• 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.

After the required certification (Form 8850) is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans.


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