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Benefit Your Business: Work Opportunity Tax Credit (WOTC)
WOTC Group Specifics and Tax Facts for Start Work Dates (on or Before December 31, 2006)

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WOTC Group Specifics for Start Work Dates on or Before December 31, 2006

  • Temporary Assistance to Needy Families (TANF) recipient An individual who received or is a member of a family that has received, TANF assistance for any nine months during the 18-month period ending on the hiring date.
  • Ex-felon -  An individual convicted of a felony and hired within one year after conviction or release from prison, and who is a member of a federally-defined economically disadvantaged family. Lower Living Standard Income Levels (PDF, 37KB)
  • Food Stamp Recipient An individual aged 18 through 24, who is a member of a family that has received Food Stamps for a specific time period within the last six months.
  • High-Risk Youth - An individual who is 18 through 24 years old on the hiring date and lives in a Federal Renewal Community, Empowerment Zone, or Enterprise Community (RC/EZ/EC) located in areas of New Haven. Renewal Community, Empowerment Zone, or Enterprise Community (RC/EZ/EC) addresses may be verified by accessing the Internet website of "HUD Locator Services" at http://egis.hud.gov/egis/cpd/rcezec/ezec_open.htm. You may also verify an RC/EZ/EC address by calling Community Connections, toll free, at (800) 998-9999.  - All Round I Enterprise Communities (ECs) expired on December 31, 2004.  Round II ECs are still in existence, but no tax benefits are available for them.
  • Summer Youth employee - An individual who is 16 or 17 years old on the hiring date, who starts work for the employer during the period of May 1 through September 15, and who lives in a Federal Enterprise Community, Empowerment Zone, or Renewal Community (RC/EZ/EC) located in areas of New Haven. 
    - All Round I Enterprise Communities (ECs) expired on December 31, 2004.  Round II ECs are still in existence, but no tax benefits are available for them.
  • Supplemental Security Income (SSI) recipient or Ticket-to-Work holder - An individual who has received Supplemental Security Income (SSI) for any month ending within the 60-day period ending on the hiring date, or a Ticket-to-Work holder* with an individual work plan through an Employment Network.
  • Veteran - An individual who has served on active duty in the U.S. Armed Forces for more than 180 days or has been discharged with a service-connected disability, and who is a member of a family receiving Food Stamps for at least a continuous three-month period during the 15-month period ending on the hiring date.
  • Vocational Rehabilitation Referral or Ticket-to-Work holder - An individual with a physical and/or mental disability which may present a substantial barrier to employment, and who has received services under a State rehabilitation plan through the Bureau of Rehabilitation Services or the Board of Education and Services for the Blind, an Employment Network as a Ticket-to-Work holder* with an individual work plan, or has received vocational rehabilitation through the US Department of Veterans' Affairs.

* The Ticket-to-Work Program assists disabled Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) beneficiaries with the training and support they need to go to work by increasing their choice of employment, vocational rehabilitation (VR) and other support services from public and private providers (Employment Networks). The Ticket-to-Work Program is flexible and voluntary, most disabled Social Security beneficiaries, age 18-64, receive a ticket (Ticket-holders).

For more information on the Ticket-to-Work program visit: Social Security - Ticket-To-Work Program Information

 

WOTC Tax Facts on or Before December 31, 2006

  • The maximum WOTC tax credit for each new employee is $2,400 for all categories except Summer Youth.
     
  • If you hire a qualified individual in all categories except Summer Youth, whom you employ for at least 400 or more hours during the first 12 months, your company may receive a credit of 40% of up to $6,000 of his or her qualified wages.
     
  • If you hire a qualified individual whom you employ for at least 120 hours, but fewer than 400 hours during the first 12 months, your business may receive a tax credit of 25% of  up to $6,000 of his or her qualified wages.
     
  • The Summer Youth group qualified wages earned from May 1 through September 15 for an individual are capped at $3,000 for a maximum tax credit of $1,200.
     
  • The Welfare to Work Tax Credit enabled the employer to earn a Federal tax credit up to $8,500 over a two-year period for each new employee who has received long-term Temporary Assistance to Needy Families (TANF).
     

  • If the qualified individuals worked for at least 400 hours or 180 days in a 12-month period, you may receive a credit for 35% of up to $10,000 of their qualified wages for that year, and 50% of up to $10,000 of their qualified wages for the second year.
     

  • There are no restrictions on the number of qualified employees you hire for whom you receive a tax credit.
     

Welfare-to-Work

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