Western Arkansas Workforce Center - Tax Credits


Work Opportunity Tax Credit
The Work Opportunity Tax Credit is a federal tax credit used to reduce the federal tax liability of private-for-profit employers. Employers can hire from 8 different targeted groups:

- WOTC and WTW Qualified TANF Recipients
- Qualified Veteran
- Qualified Ex-Felon
- High Risk Youth Vocational Rehabilitation Referral
- Qualified Summer Youth
- Qualified Food Stamp Recipient
- Qualified SSI Recipient

The maximum credit available is $2,400 per eligible worker for the adult target groups. The credit is based on 40% of up to $6,000 in qualified wages during the first year of employment. Summer youth qualifies for 40% of the first $3,000 in wages during the required working period.

Welfare-To-Work Tax Credit
Long-term family assistance recipients who begin work after December 31, 1997, and before January 1, 2004, can earn their employers up to $8,500 in the Welfare-to-Work Tax Credit if they
are members of a family:

- That received TANF for at least 18 consecutive months
before the hire date or...
- Whose TANF eligibility expired under federal or state law
after August 5, 1997 or...
- That received TANF for a total of at least 18 months,
beginning after August 5, 1997

The maximum credit for new hires employed for 400 or more hours or 180 days is 35% of qualified wages for the first year of employment and 50% for the second year; qualified wages are capped at $10,000 per year.

For more information about the Work Opportunity Tax Credit
& Welfare-to-Work Tax Credit, visit the website below: