You already know that the Work Opportunity Tax Credit (WOTC) federal tax incentive can translate into significant savings for your business by simply hiring individuals from specific target groups. But understanding that WOTC exists and actually claiming those credits are two different things.
The most important bridge between the two is the WOTC screening process. This isn’t just a bureaucratic hurdle; it’s the first step to accurately identify eligible new hires and ensure you’re positioned to capture every dollar of tax credit you deserve.
WOTC Screening Steps*
To claim the WOTC, a very specific process of screening and certification is essential. Note: you only have 28 calendar** days from the start date of the new employee to submit the forms.
- Pre-Screening at the Time of Offer (IRS Form 8850): This is the most critical step. The job applicant and the employer must complete IRS Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) on or before the day a job offer is made. This form gathers initial information to gauge potential eligibility.
- Gathering Additional Information (ETA Form 9061/9062): Along with Form 8850, the new hire will likely complete ETA Form 9061 (Individual Characteristics Form), providing more detailed background information. If the applicant has already been conditionally certified by a State Workforce Agency (SWA), you’ll use ETA Form 9062 (Conditional Certification) instead.
- Again, the All-Important Deadline: Within 28 calendar* days from the new employee’s start date you must submit both Form 8850 and ETA Form 9061/9062 to the SWA in the state where your business is located (and where the employee works). Missing this deadline, even by a day, means forfeiting the credit for that employee.
- SWA Certification: The SWA reviews your submission. If the new hire is verified as a member of a qualified target group, the SWA will issue a certification.
- Lastly, Claiming Your Credit: Once certified, you can claim the WOTC when you file your federal taxes. Taxable employers typically use IRS Form 5884 (Work Opportunity Credit) and include it on Form 3800 (General Business Credit). Eligible tax-exempt organizations can claim the credit against payroll taxes for hiring qualified veterans using Form 5884-C.
WOTC Improves Your Bottomline
The WOTC is a powerful tool for businesses of all sizes and even though the process requires attention to detail and adherence to deadlines, the financial rewards and positive impact on your bottomline and well worth the effort.
Consider working with a WOTC specialist to ensure you understand the screening process and don’t miss out on these eligible credits because of mistakes. Calculate the potential tax credits with our guide and contact one of our specialists to capitalize on your credits.
You can also find more details about the WOTC here.
*WOTC cannot generally be claimed for re-hired employees. The Work Opportunity Tax Credit is currently authorized through December 31, 2025.
**Calendar days include weekends and holidays
