Work Opportunity Tax Credit: How Employers Can Capture More Hiring Value
Hiring the right people is always the priority.
But many employers may be missing a valuable opportunity tied to hiring: the Work Opportunity Tax Credit, commonly known as WOTC.
WOTC is a federal tax credit program designed to encourage employers to hire individuals from certain targeted groups that have historically faced barriers to employment. For eligible employers, the credit can create meaningful tax savings. For growing companies or businesses with high hiring volume, the value can add up quickly.
The challenge is that WOTC is process-driven. If the right screening, forms, timing, and submissions are not handled correctly, the credit can be lost.
Quick answer: The Work Opportunity Tax Credit may allow eligible employers to claim tax credits for hiring certified individuals from certain targeted groups. To capture the credit, employers must follow specific screening and certification steps, including submitting required forms to the appropriate state workforce agency within required timelines.
What Is the Work Opportunity Tax Credit?
The Work Opportunity Tax Credit is a federal tax credit available to eligible employers that hire and pay wages to individuals who are certified as members of certain targeted groups.
These targeted groups may include qualified veterans, certain recipients of government assistance, individuals experiencing long-term unemployment, vocational rehabilitation referrals, and other eligible categories.
The purpose of WOTC is to support employment opportunities for individuals who may face barriers to employment while also giving employers a financial incentive to participate.
Why WOTC Matters for Employers
Many companies are already hiring individuals who may qualify for WOTC.
The problem is that they may not have a process in place to identify eligibility, complete the right forms, and submit documentation on time.
That means potential credits can be missed even when the employer made a qualifying hire.
For employers with consistent hiring volume, seasonal hiring, high turnover roles, or decentralized recruiting, WOTC can be especially important. A missed process can mean missed value.
WOTC Is Not Automatic
Employers do not receive WOTC simply because they hired someone who may be eligible.
The employer must complete the required screening and certification process.
That generally includes completing IRS Form 8850, the Pre-Screening Notice and Certification Request for the Work Opportunity Credit, and submitting it with required Department of Labor forms to the appropriate state workforce agency within the required deadline.
The U.S. Department of Labor states that employers are required to submit IRS Form 8850 together with ETA Form 9061 or ETA Form 9062 to the state workforce agency where the employee works within 28 calendar days after the new hire’s start date.
If the timeline is missed or documentation is incomplete, the credit may be lost.
The Main Benefits of a Strong WOTC Process
A well-managed WOTC process can help employers capture value without slowing down hiring.
- It Can Reduce Tax Liability
The most direct benefit of WOTC is potential tax savings.
Depending on the employee’s qualifying category, wages, hours worked, and other requirements, eligible employers may be able to claim credits that range from hundreds to thousands of dollars per qualified employee.
For companies hiring throughout the year, that can become meaningful.
- It Helps Employers Avoid Missed Credits
Many employers lose WOTC opportunities because the process is not built into hiring or onboarding.
If screening happens too late, forms are incomplete, or submissions are not sent on time, the opportunity may disappear.
A structured WOTC process helps employers identify potential eligibility early and keep the required steps moving.
- It Supports Compliance and Recordkeeping
Because WOTC is a federal tax credit program, documentation matters.
Employers need to maintain records that support screening, certification, submission timing, and credit calculations. A strong process helps reduce errors and creates a clearer audit trail.
- It Reduces Administrative Burden
Managing WOTC manually can be time-consuming.
HR, payroll, finance, and tax teams may all touch different parts of the process. Without coordination, responsibilities can fall through the cracks.
A WOTC service or integrated HR process can help manage screening, forms, submissions, tracking, and reporting more consistently.
- It Aligns Hiring with Broader Workforce Goals
WOTC is not just about tax savings.
The program is intended to encourage employment opportunities for individuals in targeted groups. When handled appropriately, WOTC can support broader hiring, workforce development, and community employment goals.
Why Employers Often Miss WOTC Credits
WOTC is often underused because the process is easy to overlook.
Common reasons employers miss credits include:
- No screening process during hiring or onboarding
- Screening occurs after the required timing
- Hiring managers are unaware of the program
- Forms are incomplete or submitted late
- Multiple locations use different hiring processes
- HR, payroll, and finance teams are not aligned
- No one tracks certification status or credit results
The credit may be valuable, but only if the process is managed correctly.
When a WOTC Service May Make Sense
A WOTC service may be helpful for employers that want to capture credits more consistently without adding work to internal teams.
These providers typically help with candidate screening, form completion, state workforce agency submissions, certification tracking, reporting, and documentation support.
A WOTC service may be especially useful for employers with:
- High-volume hiring
- Seasonal hiring
- Multi-location operations
- Decentralized recruiting
- Limited internal HR or tax resources
- Prior missed WOTC opportunities
- A desire to connect WOTC screening to onboarding
The goal is not to complicate hiring. The goal is to make sure eligible opportunities are not missed.
Questions Employers Should Ask
Before implementing or changing a WOTC process, employers should ask:
- Are we currently screening new hires for WOTC eligibility?
- Are forms being completed at the right time?
- Are submissions being sent within required deadlines?
- Who owns WOTC internally: HR, payroll, finance, tax, or a vendor?
- Are results being tracked?
- Are we capturing credits consistently across locations?
- Does our onboarding process support WOTC screening?
- Do we have documentation if the credit is reviewed later?
Clear ownership is one of the most important parts of a successful WOTC process.
Frequently Asked Questions
What is WOTC?
WOTC stands for Work Opportunity Tax Credit. It is a federal tax credit program for eligible employers that hire and pay wages to individuals certified as members of certain targeted groups.
Is WOTC automatic?
No. Employers must follow the required screening and certification process. If the required forms and deadlines are not handled correctly, the credit may be lost.
What forms are used for WOTC?
Employers generally use IRS Form 8850 and either ETA Form 9061 or ETA Form 9062 as part of the certification request process submitted to the appropriate state workforce agency.
What is the WOTC deadline?
The Department of Labor states that employers must submit IRS Form 8850 with the required ETA form to the appropriate state workforce agency within 28 calendar days after the new hire’s start date.
Should employers use a WOTC service?
A WOTC service may be helpful for employers with high hiring volume, seasonal hiring, multi-location operations, or limited internal capacity to manage screening, documentation, and certification tracking.
The Bottom Line
WOTC can be valuable, but it is not automatic.
Employers need the right process to identify potential eligibility, complete forms correctly, submit documentation on time, and track certifications.
For companies already hiring, WOTC may represent an opportunity to capture value that would otherwise be left behind.
Need Help Reviewing Your WOTC Process?
WOTC works best when it is integrated into the hiring and onboarding process.
EvolveHR helps companies manage HR, payroll, benefits, compliance, HR technology, employee relations, and organizational development through a more connected and accountable service model. If your WOTC process needs a closer look, EvolveHR can help you review the process and identify where technology, structure, or outside support may be needed.
About EvolveHR
Have questions about this article or want to explore how EvolveHR can support your organization? Reach out to us. We would be happy to help.
Phone: 312-971-6332
Email: info@evolvehr.com
Website: www.evolvehr.com
EvolveHR provides HR consulting, payroll administration, employee benefits administration, HRIS support, HR risk management, and organizational development services to small, midsize, and enterprise companies.