On December 20, 2006, the President signed into law the Tax Relief and Health Care Act of 2006 (P.L. 109-432). This legislation not only extended the WOTC Program (retroactively to January 1, 2006) through December 31, 2007, but also merged the Welfare-to-Work Tax Credit (WtWTC) into WOTC and repealed permanently Section 51 (A) of the IRC. Congress also amended certain statutory definitions with respect to new hires that began to work for an employer after December 21, 2006.
The Small Business and Work Opportunity Tax Act of 2007 (P.L 110-28) was signed into law on May 25, 2007. Section 8211 of the Act provides a 44 month extension of the WOTC Program through August 31, 2011.
The bill includes program changes effective January 1, 2007. These changes include:
1) An increase in the age for the Food Stamp category from 24 to 40
2) Eliminates the income requirement for the Ex-felon Target Group
3) Combines the WOTC and Welfare-to-Work credits
4) Increases the first year credit for Welfare-to-Work to 40% - the second year remains at 50%
5) Increases the number of days allowed to file the IRS Form 8850 from 21 days to 28 days
6) Renames the High-Risk Youth group (D) and calls it Designated Community Resident (DCR) Age category 18-40 with principal abode within EZ, RC, or RRC
7) Clarifies that "ticket holders" are included in the vocational rehabilitation referral target group
8) Expands the definition of the "Qualified Veteran" to include "disabled veterans" who are entitled to compensation for a service connected disability within one year after having been discharged or released from active duty
The Work Opportunity Tax Credit Program is a federal tax credit which provides Ohio employers with a tax credit against their federal tax liability for hiring individuals from nine target groups of disadvantaged job seekers. Tax credits range from $1,200 to $2,400 for all WOTC target groups. Employers may receive a maximum credit of up to $9,000 per eligible employee for the Long Term IV-A target group. Click here for a detailed description of each target group.
There are only two forms required to apply for these tax credits. The IRS Form 8850 (and instructions) from the Internal Revenue Service which opens up your request for a tax credit, and the ETA Form 9061 from the Department of Labor which lists the different target groups. A Spanish version of these forms is also available at the following links: IRS Form 8850 and ETA Form 9061.
The WOTC Tax Credits are administered by the Ohio Department of Job & Family Services. Ohio processes requests in accordance with the business rules established by the Internal Revenue Service and the Department of Labor for all target groups.