Are My Employees Eligible for Work Opportunity Tax Credit (WOTC)?

If you’re interested in claiming a work opportunity Tax Credit (WOTC) on future employees, you’ll need to certify their eligibility with a State Workforce Agency (SWA) by asking candidates to complete the pre-screening form Form 8850. This form should determine whether they fall into one of ten target groups on whose wages you’re allowed to claim credit. 

Lift HCM has helped businesses file for WOTC since the program’s inception. We’ll walk you through the requisite qualifications of the 10 WOTC target groups to give you a better idea of whether any current or future candidates are likely to qualify.

Are Existing Employees Eligible?

You must have completed the pre-screening form on or before a candidates offer date and submitted all relevant documentation to the appropriate SWA within 28 days of their start date. You’re eligible to begin claiming WOTC on federal quarterly taxes upon receipt of certification (of an employee’s eligibility) from the SWA. Finally, it’s worth noting that you can only claim WOTC for employees who started working on or before December 31 of 2025 (so clock’s-a-tickin’!).

10 Targeted Groups for Claiming WOTC

Candidates on who whose wages you intend to claim WOTC must meet the qualifications listed for inclusion within any of the 10 target groups.

1. Veteran WOTC Qualifications

A veteran is considered to be anyone who meets the following two qualifications:

1. They have served on active duty with the United States’ Armed Forces for over 180 days (excluding training) or have been discharged or released from active duty due to a service-related disability.
2. They have not served on active duty (again, not counting their training) with the United States Armed Forces for a period of 90 days ending within the 60 days prior to their hiring date.

Those considered veterans by these standards must also meet any of the following qualifications:

• They are a member of a family who has received SNAP benefits for three  of the 15 months prior to their hiring date.
• They’ve been unemployed for between four weeks and six months (it doesn’t have to be consecutively) within one year of their hiring date.
• They’ve been unemployed for a total of six months (again, the dates don’t have to be consecutive) within one year of their hiring date.
• They’re eligible for compensation for a service-related disability and are being hired within one year of having been released or discharged from active duty in the U.S. Armed Forces.
• They’ve been eligible for compensation for a service-related disability and have been unemployed for at least six consecutive or non-consecutive months within a year of their hiring date.

2. Ex-Felon WOTC Qualifications

An ex-felon must either have been convicted of a felony or have been released from prison for a felony within the past year.

3. SSI Recipient WOTC Qualifications

Candidates qualify if they’ve received supplemental security income (SSI) during any month that ended within sixty days of their hiring date. This includes anyone receiving benefits as defined in section 1616 of the Social Security Act as well as section 212 of Public Law 93-66.

4. IV-A Recipient WOTC Qualifications

Applicants must belong to a family that received assistance from a program funded by title IV of the Social Security Act during any nine of the 18 months prior to their hiring date; this is to say, programs relating to Temporary Assistance for Needy Families (TANF).

5. SNAP Benefits Recipient WOTC Qualifications

The candidate is between the ages of 18 and 40 (as of their hiring date) and

1. has received (or is part of a family that has received) SNAP benefits for the previous six months or at least three of the previous five months, or
2. While no eligible for assistance as defined in 6(o) of the Food and Nutrition Act of 2008, are part of a family that received SNAP benefits three of the five months prior to their hiring date.

6. Long-Term Unemployment Recipient WOTC Qualifications

The candidate has been unemployed for at least 27 consecutive weeks prior to their start date (or the day they completed their portion of Form 8850 as a pre-screener; whichever is earlier) and has received unemployment compensation for at least part of that time.

7. Long-Term Family Assistance Recipients WOTC Qualifications

Candidates must meet any one of the following conditions:

• Received (or is part of a family that received) Temporary Assistance for Needy Families (TANF) payments for a minimum of 18 consecutive months prior to their hiring date.
• Received TANF payments for at least 18 months (beginning after 8/5/1997), with the earliest month ending within two years of their hiring date.
• Are within two years of becoming ineligible for assistance from TANF payments due to state or federal limitations on the maximum window of time for their eligibility.

8. Vocational Rehabilitation Referrals WOTC Qualifications

The candidate possesses a physical or mental disability and is being referred to you, the employer, while receiving (or upon completing) rehabilitative services in accordance with:

• A program organized by the Department of Veteran Affairs,
• A plan approved by the state under the Rehabilitation Act of 1973, or
• An Employment Network Plan (as laid out by the Ticket to Work program).

9. Summer Youth Employee WOTC Qualifications

The candidate must live in an Empowerment Zone (EZ)^* and must be at least 16 years old, but under the age of 18 by their hiring date (or on May 1; whichever is later). They may only provide services to you, the employer, between May 1 and September 15 (meaning they could not have been employed by you prior to May 1). They also must never have worked for you before.

10. Designated Community Residents (DCR) WOTC Qualifications

The candidate is between the ages of 18 and 40 (by their hiring date). Wages used to determine the credit must be earned for services performed while the candidate’s principle residence was within an Empowerment Zone (EZ)^* or a Rural Renewal County (RRC)^*.

^* See Form 8850 for a full list of Empowerment Zones and Rural Renewal Counties in each state.

WOTC to Do Now?

We hope this helps give you some idea whether the candidates you’re screening may qualify you to claim a work opportunity tax credit. If you know candidates for a role you've posted or plan to post qualify for WOTC, your next priority should be certifying their eligibility with the appropriate SWA in advance of filing a claim.

No matter how comprehensive or user-friendly our guides can be, there's no escaping the fact that filing a claim can be daunting. We've helped businesses like yours save money during tax season for decades. Our team of specialists is on call to help you navigate the process of claiming a work opportunity tax credit in case you need a Lift.