Department of Workforce Services Work Opportunity Tax Credit
It is recommended that you apply online. By utilizing the WOTC web-based system, the significant benefits for you include:
- Reducing the time it takes for you to get your applications to us.
- Providing immediate confirmation that your applications have been submitted for processing.
- Enabling you to see the status of your submitted applications online.
WOTC program staff is available to provide training and technical support as needed.
Employers can only receive a tax credit if they have obtained certification from the Arkansas Department of Workforce Services.
Employers: Click Here
Consultants: Click Here
Applications that cannot be submitted electronically should be mailed to the following address:
Arkansas Department of Workforce Services
P.O. Box 2981
Little Rock, AR 72203-2981
Work Opportunity Tax Credit
WOTC is a federal tax credit that encourages employers to hire workers from targeted groups. The tax credit is designed to help job seekers gain on-the-job experience, move towards economic self-sufficiency and help reduce employer’s federal tax liability.
How Much is the Tax Credit?
The tax credit taken into account for hiring qualified disabled veterans is $12,000 for first-year wages. The tax credit for hiring long-term Family Assistance recipients is applicable to 40 percent of first $10,000 of wages in year one and 50 percent of first $10,000 of wages in year two.
The tax credit for hiring other target groups, except summer youth employees, is up to $2,400 for each new hire: 40 percent of qualified first year wages for those employed 400 or more hours; 25 percent for those employed at least 120 hours (but less than 400). Qualified wages are capped at $6,000. Summer youth wages are capped at $3,000.
Who are the Targeted Groups?
The employer must hire from among the following groups of job seekers to qualify for the Work Opportunity Tax Credit.
A. Qualified IV-A Recipient – This target group refers to 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/TEA). The assistance must be received for any nine months during the 18-month period that ends on the hiring date.
B. Qualified Veteran – This target group refers to a person who is any of the following:
1. A member of a family receiving assistance under the Food Stamp Program for at least a three month period during the 15 months ending on the hiring date.
2. Entitled to compensation for a service-connected disability and is hired not more than one year after being discharged or released from active duty in the U.S. Armed Forces.
3. Entitled to compensation for a service-connected disability and was unemployed for a period or periods totaling at least six months (whether or nor consecutive) in the one year period ending on the hiring date.
Note: To be considered a veteran, the applicant must
(a) have served on active duty (not including training) in the Armed Forces of the United States for a period of more than 180 days or have been discharged or released from active duty in the Armed Forces of the United States for a service-connected disability and
(b) not have a period of active duty (not including training) of more than 90 days that ended during the 60 days ending on the hiring date.
C. Qualified Ex-Felon – This target group refers to any person certified by the designated local agency as one who
1. has been convicted of a felony under any statute of the United States or any State and
2. has a hiring date which is not more than one year after the later of the date on which he/she was convicted or the date released from prison.
Note: The definition of the Ex-Felon target group has been clarified, in past legislation, to treat an individual as convicted if a State Court places the individual on probation without a finding of guilty (deferred adjudication). Ex-Felons who are participating in a transitional program, e.g., work release, are eligible for the WOTC program, if they were convicted of a felony and are members of an economically disadvantaged family. Those incarcerated, and not on work release, are not eligible because they are considered not available for employment.
D. Vocational Rehabilitation Referral – This target group refers to any person certified by the designated local agency as
1. having a physical or mental disability, which for that individual constitutes or results in a substantial handicap to employment and
2. was referred to the employer upon, or at any time after completing or while receiving, rehabilitative services pursuant to an individualized written plan of employment under a state plan for vocational rehabilitation services approved under the Rehabilitation Act of 1973, an employment network under the Ticket to Work program or the Department of Veteran Affairs.
(Note: Ticket to Work refers to Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) recipients who assigned their ticket to an employment network with the goal of regaining self-sufficiency through work.)
Ticket to Work should be written at the top of the Individual Characteristics Form (ETA 9061).
Additional information is available here.
E. Qualified Summer Youth – This target group refers to any person certified by the designated local agency as one who
1. performs services for the employer between May 1 and September 15;
2. has attained age 16 but not 18 on the hiring date (or by May 1st of the calendar year involved);
3. has not been employed by the same employer; and
4. has his/her principal place of abode within an empowerment zone or rural renewal community (see list in “D” above).
F. Qualified Food Stamp Recipient – This target group refers to any person certified by the designated local agency as one who
1. has attained the age of 18 but not yet age 40 on the hiring date and
2. is a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for the six month period ending on the hiring date or is receiving such assistance for at least three months of the five month period ending on the hiring date.
G. SSI Recipient – This target group refers to any individual who is certified by the designated local agency as receiving supplemental security income benefits under Title XVI of the Social Security Act for any month ending within the 60-day period ending on the hiring date.
H. Long-Term Family Assistance Recipient – This target group refers to a member of a family that received Aid to Families with Dependent Children/Transitional Employment Assistance (AFDC/TEA) for at least 18 consecutive months before the date of hire or as being a member of a family receiving assistance under a IV-A program for 18 months beginning after August 5, 1997, and as having a hiring date that is not more than two years after the end of the earliest 18-month period; or as being a member of a family that ceased to be eligible after August 5, 1997, for IV-A assistance by reason of any limitation imposed by federal or state law on the maximum period the assistance is payable to the family and as having a hiring date that is not more than two years after the date of cessation.
I. Unemployed Veterans – Individuals who begin to work for an employer on or after November 22, 2011.
1. Veterans unemployed for at least 4 weeks.
2. Veterans unemployed for at least 6 months.
Qualified “tax-exempt” (i.e. 501c) organizations can now participate by hiring qualified veterans and are now eligible to claim the WOTC.
J. Long-Term Unemployment Recipient – Refers to any individual who is certified by the designated local agency as being in a period of unemployment that is not less than 27 consecutive weeks and includes a period in which the individual was receiving unemployment compensation under state or federal law.
For carry forward and other tax information, contact the Internal Revenue Service.
For additional information call toll free 1-866-330-9459 or 501-683-1354.
You may also contact the WOTC unit at ADWS.WOTC@arkansas.gov