New employees are always a valuable investment in your business’s growth. But what if some of those new hires came with a tax credit of up to $9,600?
That’s the opportunity many employers miss with the Work Opportunity Tax Credit (WOTC)—a federal incentive designed to encourage hiring individuals from targeted groups who face barriers to employment. While the program is underused, it offers a significant savings opportunity if you know who qualifies and how to file.
Who Qualifies? WOTC Target Groups at a Glance
Businesses may receive tax credits for hiring individuals from one or more of the following WOTC-eligible groups:
- Veterans: May qualify if they have a service-connected disability, received SNAP benefits, or were unemployed for at least 4 weeks in the previous year.
- SNAP Recipients: Adults between 18 and 39 who received Supplemental Nutrition Assistance Program (SNAP) benefits in the 6 months prior to hiring.
- Long-Term Unemployed: Individuals unemployed for 27 consecutive weeks or more who also received unemployment benefits during that time.
- Supplemental Security Income (SSI) Recipients: Individuals who received SSI benefits under Title XVI of the Social Security Act in any month within the 60 days before hiring.
- Ex-Felons: Hired within one year of their conviction or release from prison.
- Vocational Rehabilitation Referrals: People with disabilities referred by a state vocational rehabilitation agency, the VA, or a similar program.
- Residents of Empowerment Zones or Rural Renewal Counties: Adults 18 to 39 living in certain federally designated areas.
- TANF Recipients: Individuals from families who received Temporary Assistance for Needy Families (TANF) for at least 9 of the 18 months before hiring.
See the full list of eligible WOTC groups from the U.S. Department of Labor.
Commonly Overlooked Groups That May Surprise You
There are a surprisingly large number of applicants who fall into these three groups:
- SNAP recipients
- Young adults in Empowerment Zones
- Long-Term Unemployed with strong qualifications
The USDA estimates that more than 12 percent of adults relied on SNAP benefits in 2024. That’s nearly 42 million people every month. While they weren’t all in the 18 to 39 demographic, this still represents a large pool of potential applicants who could be WOTC eligible for your business.
Did You Know?
Parts of Indiana, including areas in Indianapolis, Gary, Hammond, and East Chicago, are federally designated Empowerment Zones. Perry County is also a designated Rural Renewal County. Adults ages 18–39 living in these areas may qualify your business for WOTC.
Use the WOTC Address Locator to make sure you’re not missing out on these opportunities.
Long-term unemployment may result from layoffs, industry shifts, caregiving responsibilities, or life changes. Don’t overlook these applicants; they often bring strong skills and motivation to rejoin the workforce, and they can qualify you for substantial credits.
WOTC Screening and Documentation Process
Like most tax credits, WOTC requires documentation. To qualify, new hires must be screened using:
- IRS Form 8850 (Pre-Screening Notice)
- ETA Form 9061 (Individual Characteristics Form)
These must be submitted to the Indiana Department of Workforce Development (DWD) within 28 days of the employee’s start date.
If the employee qualifies as Long-Term Unemployed, you’ll also need to submit ETA Form 9175 electronically through Indiana’s official WOTC portal.
To avoid missing deadlines, consider using a payroll provider like ASAP Payroll that offers WOTC screening integration. Automated onboarding can prompt candidates to complete these forms and ensure timely submission.
How to Talk to Candidates About WOTC
Some of the WOTC-eligible categories involve sensitive personal information. It’s important to communicate clearly, respectfully, and consistently.
Best Practices When Discussing WOTC:
- Let applicants know that answering WOTC screening questions is optional.
- Reassure them that responses are confidential and do not impact hiring decisions.
- Avoid assumptions based on appearance or background—screen all new hires uniformly.
- Include WOTC forms in your standard digital onboarding alongside tax forms and direct deposit setup.
Sample Language for WOTC Onboarding:
“As part of our hiring process, we participate in a federal program that may offer tax incentives based on an applicant’s background. You’ll see some questions related to this program during onboarding. The questions are completely optional. Your answers will be confidential and won’t affect your employment in any way.”
Training your HR or onboarding team to handle these conversations with care can go a long way in building trust and maintaining compliance.
WOTC Can Mean Big Tax Incentives
If you’re hiring, now’s the time to put a WOTC process in place. With proper screening, documentation, and support, you could be earning up to $9,600 per eligible new hire—without changing your hiring practices.
Want to learn how to get started? Check out our free WOTC Resource Guide and discover how ASAP Payroll makes capturing these credits easy.