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WOTC Examples

WOTC Examples

You are probably wondering what some average annual tax credits may be for a typical company. All organizations are unique. The credit you receive will be based on the hires your organization actually makes. Organizations that hire more eligible employees will obviously receive more tax credits.

The two sections below show a realistic benefit at the company level AND at the individual employee level.

Company Level Examples

  • 50 employee Manufacturing company with 25% annual turnover should realize $2,250 in annual WOTC credits
  • 50 employee Healthcare company with 50% annual turnover should realize $5,775 in annual WOTC credits
  • 50 employee Restaurant with 75% annual turnover should realize $8,438 in annual WOTC credits.

Targeted Groups

Employers can hire eligible employees from the following target groups for WOTC.

An individual who is a member of a family receiving assistance under a state plan approved under part A of title IV of the Social Security Act relating to Temporary Assistance for Needy Families (TANF). The assistance must be received for any 9-month period during the 18-month period ending on the hiring date.

A “qualified veteran” is a veteran who is any of the following:

  • A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least 3 months during the first 15 months of employment.
  • Unemployed for a period 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 totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.
  • A disabled veteran entitled to compensation for a service-connected disability hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces.
  • A disabled veteran entitled to compensation for a service-connected disability who is unemployed for a period totaling at least six months (whether or not consecutive) in the one-year period ending on the hiring date.

See IRS Notice 2012-13 (PDF) for more detailed information.

A “qualified ex-felon” is a person hired within a year of:

  • Being convicted of a felony or
  • Being released from prison from the felony

A DCR is an individual who, on the date of hiring

  • Is at least 18 years old and under 40,
  • Resides within one of the following:
    • An Empowerment zone
    • An Enterprise community
    • A Renewal community
  • AND continues to reside at the locations after employment.

A “vocational rehabilitation referral” is a person who has a physical or mental disability and has been referred to the employer while receiving or upon completion of rehabilitative services pursuant to:

  • A state plan approved under the Rehabilitation Act of 1973 OR
  • An Employment Network Plan under the Ticket to Work program, OR
  • A program carried out under the Department of Veteran Affairs.

A “qualified summer youth employee” is one who:

  • Is at least 16 years old, but under 18 on the date of hire or on May 1, whichever is later, AND
  • Is only employed between May 1 and September 15 (was not employed prior to May 1st) AND
  • Resides in an Empowerment Zone (EZ), enterprise community or renewal community.

A “qualified SNAP benefits recipient” is an individual who on the date of hire is:

  • At least 18 years old and under 40, AND
  • A member of a family that received SNAP benefits for:
    • the previous 6 months OR
    • at least 3 of the previous 5 months.

An individual is a “qualified SSI recipient” if a month for which this person received SSI benefits is within 60 days of the date this person is hired.

A “long term family recipient” is an individual who at the time of hiring is a member of a family that meet one of the following conditions:

  • Received assistance under an IV-A program for a minimum of the prior 18 consecutive months; OR
  • Received assistance for 18 months beginning after 8/5/1997 and it has not been more than 2 years since the end of the earliest of such 18-month period; OR
  • Ceased to be eligible for such assistance because a Federal or State law limited the maximum time those payments could be made, and it has been not more than 2 years since the cessation.

A qualified long-term unemployment recipient is one who has been unemployed for not less than 27 consecutive weeks at the time of hiring and received unemployment compensation during some or all or the unemployment period. 

Tax Credit Guidelines Per Individual

WOTC-Tax-Credit-Calculations