Let’s talk about the Work Opportunity Tax Credit (WOTC). This is a
Federal Tax Credit available to employers for hiring individuals from
certain targeted groups who have consistently faced significant barriers
to employment. Currently, the WOTC can range between $1,200 and $9,600 (or
more under certain circumstances) per qualified employee and the credit is
available to all companies regardless of business location.
On August 10, 2021, the Department of the Treasury, and the Internal
Revenue Service (IRS) issued Notice 2021-43. This notice provides
transition relief by extending the 28-day deadline for employers hiring
individuals who are Designated Community Residents or Qualified Summer
Youth Employees who begin work on or after January 1, 2021, and before
October 9, 2021, to submit a completed Form 8850 to the designated local
agency (DLA) no later than November 8, 2021.
This means your business can now retroactively qualify employees that are
a member of the designated community resident targeted group or the
qualified summer youth employee targeted group who begin work on or after
the beginning of the year until now.
Designated Community Resident (DCR)
A DCR is an individual who, on the date of
Is at least 18 years old and under 40, resides within one of the
- An Empowerment zone
- An Enterprise community
- A Renewal community
AND continues to reside at the locations after
Summer Youth Employee
A “qualified summer youth employee” is one
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.
The opportunity to retroactively qualify employees ends November 8, 2021.
If your business has not taken advantage of the WOTC and would like to
start, now is the time. Get caught up today and let our team of experts
assist you in claiming this potentially significant tax credit
After you take advantage of this current opportunity, our team at Boos
& Associates will help you make sure your business continues to claim
the WOTC. After November 8, 2021, businesses will only have a 28-day
window to submit a completed Form 8850 to the designated local agency
after a new hire’s start date. Our team will work closely with your
management group to make sure that as your business expands with every new
hire, we proactively assist you in determining whether the new hire
qualifies you to receive the WOTC.
Note: the Consolidated Appropriation Act, 2021 (Section 113 of Division
EE P.L. 116-260) authorized the extension of the WOTC until December 31,
Additionally, on September 12, 2021, the Congressional Committee released
some of its proposed legislative language that is to be included in
Biden’s “Build Back Better Act,” a $3.5 trillion reconciliation bill.
Among many of the proposals is Section 138513 “Enhancement of Work
Opportunity Credit During COVID-19 Recovery Period.” This proposal would:
1) eliminate the restriction against
claiming the WOTC for rehired employees,
2) increase the amount of tax credit from 40% of $6,000 in qualified wages
to 50% of $10,000, and
3) provide a similar credit for the second year of employment of qualified
This bill has not yet been signed into law; however, stay tuned as we are
focused on and current with opportunities coming out of Washington.
If you think your business can benefit from the WOTC, please contact us:firstname.lastname@example.org.