What's covered in this guide?:
What the Work Opportunity Tax Credit is
The Work Opportunity Tax Credit (WOTC) is a federal income tax credit available to employers that hire individuals from one of several IRS-designated targeted groups. It's administered by the IRS and the U.S. Department of Labor's Employment and Training Administration (ETA), and certified state by state through each state workforce agency.
The targeted groups currently include qualified veterans, long-term family assistance (TANF) recipients, SNAP recipients, designated community residents, vocational rehabilitation referrals, ex-felons, SSI recipients, qualified summer youth employees, and qualified long-term unemployment recipients. The credit amount and the qualifying wage cap depend on the targeted group and the hours the employee works in their first year.
To claim WOTC for a hire, an employer has to:
Pre-screen the applicant on or before the day a job offer is made, using IRS Form 8850 (Pre-Screening Notice and Certification Request).
Submit Form 8850, together with ETA Form 9061 (Individual Characteristics Form) where applicable, to the state workforce agency within 28 days of the employee's start date.
Wait for the state workforce agency to certify the employee as a member of a targeted group before claiming the credit on the federal return.
Workforce gives WOTC-eligible new hires both forms inside the mobile app, captures their answers and signature, and presents the data back to the admin on the employee's tax forms in payroll. Workforce will file the form with the state workforce agency if eligible.
Enabling WOTC for an employee
WOTC is configured per employee, not at the organization level. Turn it on either when you hire the employee or later from their profile. The setting is the same in both places.
Open the employee's profile and go to the Personal Details form (or, for a new hire, open the hire/onboarding form for the employee).
In the US-specific section, tick Worker is Work Opportunity Tax Credit (WOTC) eligible. The on-screen helper text confirms: Forms 8850 and 9061 will be visible for the employee to fill out.
Save the form.
Once the box is ticked, Form 8850 and Form 9061 appear in the employee's WOTC tax forms in the mobile app, and the admin tax-documents view exposes the same forms for review and the employer-side completion of Form 8850.
Tip: Form 8850 has a hard 28-day deadline from the employee's start date. Tick WOTC eligible as part of the hire so the employee can complete the forms on day one.
What the employee fills out
In the Workforce mobile app, an employee with WOTC enabled sees a Work Opportunity Tax Credit Forms screen with two tabs:
Form 8850 — the IRS Pre-Screening Notice. The employee enters their county, then answers the yes/no questions used to identify a possible targeted group (conditional certification from a state workforce agency, TANF/SNAP/SSI receipt, vocational rehabilitation, ex-felon status, veteran status with details on unemployment periods and service-connected disability, recent unemployment compensation, and long-term TANF receipt) and signs the form.
Form 9061 — the ETA Individual Characteristics Form. Filling this in is optional but is what the state workforce agency uses to determine targeted-group eligibility when no conditional certification has been issued.
Form 9061 in Workforce mirrors the federal ETA-9061 layout. The employee enters:
Whether they have worked for this employer before.
Their starting wage and the job position they were hired for.
A targeted-group section for each category they may belong to: Qualified IV-A Recipient, Qualified Veteran, Qualified Ex-Felon, Designated Community Resident (DCR), Vocational Rehabilitation Referral, Qualified Summer Youth Employee, Qualified SNAP Recipient, Qualified SSI Recipient, Long-Term Family Assistance Recipient, and Qualified Long-Term Unemployment Recipient. Each section is opt-in via a checkbox and only asks for follow-up details (primary benefits recipient, city and state where benefits were received, conviction and release dates for ex-felons, etc.) when the employee checks the box.
Sources used to document eligibility — a free-text field where the employee or SWA staff can list the supporting documentation, marked as attached (A) or forthcoming (F).
Who is signing the form (the applicant, the employer, the employer's preparer, the state workforce agency, or a parent/guardian), followed by their signature.
A link to the official ETA-9061 PDF on dol.gov is shown above the form so the employee can read the full instructions if needed.
What the admin completes and reviews
On the desktop admin view, an employee with WOTC enabled has Form 8850 and Form 9061 listed alongside their other tax forms. The admin can:
See the status of each form (whether the employee has signed Form 8850, whether Form 9061 has been completed).
Complete the employer section of Form 8850. This captures the contact details (person to contact if different from the employer, telephone, street address, city, state, ZIP), the target group selection (none, group 4, or group 6), the dates the applicant gave information, was offered the job, was hired, and started the job, the job title of the person signing, and the employer signature certifying the form under penalty of perjury.
View the completed Form 9061 the employee submitted.
Once both the employee and employer sections of Form 8850 are signed, Workforce will submit the form to the state workforce agency if the employee is eliglble.
Things to keep in mind
WOTC is voluntary for the employee. If they choose not to complete the forms, no certification request is made and no credit can be claimed for that hire.
The credit is a federal income tax credit, not a payroll tax credit. It doesn't change the employee's gross wages, paycheck, or W-2.
The 28-day deadline is firm. Form 8850 must reach the state workforce agency within 28 days of the employee's start date or the credit is lost.
Re-hires generally don't qualify. WOTC is intended for new hires. The Form 9061 question about prior employment with the same employer feeds into that determination.
If WOTC forms aren't visible for an employee, check the eligibility setting. The forms only appear once Worker is Work Opportunity Tax Credit (WOTC) eligible is ticked on the employee's profile.