“I’ve never heard of the Work Opportunity Tax Credit,” says Maria. “Tell me about it.”

“It’s a program designed to encourage businesses to hire people who are poor, disabled, or face other challenges,” says Veronica. “There are nine WOTC target groups. When a business hires someone in one of those nine target groups, they may qualify for a tax credit.”

“Interesting. My business hires a lot of people with disabilities,” says Maria. “I wonder if we’d qualify?”

“You probably would,” says Veronica. “There are several target groups that people with disabilities may fit into: Vocational Rehabilitation and Ticket to Work Employment Network referrals, Supplemental Security Income (SSI) recipients, and CalWORKS and long-term Temporary Aid to Needy Families (TANF) recipients.”

“That’s good to know,” says Maria. “How much is the tax credit?”

“If you hire someone in one of the first eight WOTC target groups, you can get a tax credit of up to $2,400. If you hire someone in the ninth target group—long-term Temporary Aid to Needy Families (TANF) recipients—the credit could be as high as $9,000 over two years,” says Veronica.

“That’s a lot of money,” says Maria. “How do you know if the people you’re hiring are in one of the target groups?”

“Some job seekers have been pre-screened for eligibility by their local Employment Development Department office. If not, there’s a form you can ask them to fill out to determine if they’re eligible,” says Veronica.

“What if they don’t want to provide that kind of information?” asks Maria.

“They don’t have to,” says Veronica. “Their participation is strictly voluntary. If they’re willing to participate you need to be sure and submit the WOTC application forms to the WOTC Center within 28 days of the employee’s first day of work.”

“OK,” says Maria. “Are there any other restrictions or things I should know about?”

“Well, the employee has to work at least 120 hours within their first year on the job for your business to qualify for a tax credit,” says Veronica. “If they work more than 400 hours, the tax credit is higher. In our case, we hired four people who fit within one of the first eight target groups. They all worked over 400 hours, so we were able to claim the maximum tax credit on each.”

“How much was that?” asks Maria.

“40 percent on the first $6,000 we paid each of them,” says Veronica. “So that came out to a tax credit of $2,400 per employee.”

“Wow!” says Maria. “Your business saved quite a bit money by making use of this program.”

“We sure did,” says Veronica. “And if we hire new employees who fit into one of the target groups, we’ll make use of it again.”