The Work Opportunity Tax Credit in Virginia
The Work Opportunity Tax Credit in Virginia, also known as Virginia WOTC, is a Federal tax credit afforded to Virginia employers who hire workers that are members of certain target groups that have faced significant barriers to employment. The Virginia Work Opportunity Tax Credit benefits employers by providing them an opportunity to reduce their tax burden and embrace diversity in the workplace.
It benefits the workforce by creating access to jobs for all qualified workers in the U.S. Individuals from target groups then receive increased opportunities to enter the workforce and earning a living wage, supporting the local, state and national economies. Find out more about how to get involved in the work opportunity tax credit in Virginia in the following sections.
How to Apply for the Work Opportunity Tax Credit in Virginia
The entire Virginia Work Opportunity Tax Credit application can be completed by the employer online. Employers must complete required IRS forms and submit these the day an offer is made to an eligible worker. To complete the Virginia Work Opportunity Tax Credit requirements employers must then submit Employment and Training Administration forms to the Virginia Employment Commission within a certain number of days of the employee’s hire. The employer may then utilize the Virginia Work Opportunity Tax Credit online systems to file for the tax credit with the IRS. For more specific instructions to help you apply for the WOTC, download our complimentary guide today.
Virginia Work Opportunity Tax Credit Eligibility Requirements
To begin the Virginia Work Opportunity Tax Credit registration, employers must establish their eligibility for tax credits based on the target groups to which their employees belong. There are 10 WOTC target groups for whom tax credits are given. These include but are not limited to:
- Long-Term Temporary Assistance for Needy Families (TANF) recipients who have received supplemental cash assistance for at least 18 months immediately preceding hire, have exhausted their TANF benefits due to Federal or state law or have received TANF benefits for at least 18 months since August 5, 1997 and is being hired no more than 2 years after their first period of TANF reception.
- Short-Term TANF recipients who have received supplemental cash payments for at least 9 of the last 18 months.
- People enrolled in the Supplemental Nutrition Assistance Program who are between the ages of 18 and 39 and have received SNAP benefits for the 6 months preceding hire or 3 of the last 5 months preceding hire.
To learn more about the other target groups, click here to download our comprehensive guide.
Virginia WOTC does not allow employers to claim those who are related to the employer, former employers or majority owners of the business as qualified employees. The total amount of Virginia Work Opportunity Tax Credit benefits will be established by the number of employees who qualify for WOTC, the target groups to which the employees belong and the wages earned by those employees. Wages only qualify toward VA work opportunity tax credit benefits if directly paid by the employer and the employer pays Federal Unemployment Taxes on the wages issued.
Claiming Work Opportunity Tax Credits in Virginia
There is no limit on the number of workers one employer may hire to qualify for the Work Opportunity Tax Credit in VA, but there is a cap on the dollar amount of the tax credit the employer may claim for each employee. The total Work Opportunity Tax Credit is based on a percentage of the wages earned by qualified employees over the span of their first year of employment and the target group the employees to which those employees belong. Employers participating in Virginia WOTC can claim a tax credit for qualified workers, and the amount of the credit is based on the number of hours the employee worked during the first year of employment.
Employers eligible for Virginia WOTC who hire long-term recipients of Temporary Assistance for Needy Families (TANF) can claim a tax credit for these employees for 2 years while tax credits for employees from other target groups can only be claimed for 1 year. Employers participating in the work opportunity tax credit in VA are eligible for a sizable tax credit of the wages earned by a long-term TANF recipient during their first and second year of work. However, qualified youth must work a certain number of days between May 1 and September 15 to qualify their earnings for a tax credit.