The Work Opportunity Tax Credit program is a federal business initiative designed to increase employment opportunities for people who typically experience certain barriers to employment, such as veterans, public assistance recipients, or ex-felons.
Contact WOTC
Call toll-free 1-800-482-2959 or 313-456-2105.
Email WOTCUnit@michigan.gov
The Work Opportunity Tax Credit depends on the number of hours worked in the first year. If an employee works 120-399 hours, the employer qualifies for a 25% tax credit of first year wages. That tax credit increases to 40% if the employee works 400 hours or more.
All or part of the tax credit can be claimed in the year prior to being approved for the credit or spread out over the next 20 years. Eligible new hires cannot have any prior work history with the employer, cannot be a relative of the employer and must be a U.S. citizen or permanent resident.
Employers must submit the proper documentation to prove that the new hire is covered by one of the target groups. Failure to submit the necessary information will delay an application.
| Target Group | Tax Credit | First Year Wages |
| Disabled Veteran | $3,000 - $4,800 | $12,000 |
| Disabled and Unemployed Veteran | $6,000 - $9,600 | $24,000 |
| Unemployed Veteran (at least 4 weeks) | $1,500 - $2,400 | $6,000 |
| Unemployed Veteran (at least 6 months) | $3,500 - $5,600 | $14,000 |
| TANF Recipients: Short-Term | $1,500 - $2,400 | $6,000 |
| TANF Recipients: Long-Term | $2,500 - $9,000 | $10,000 (50% 2nd year) |
| SNAP, Designated Community, Voc. Rehab, Ex-Felon, SSI | $1,500 - $2,400 | $6,000 |
| Summer Youth (SY) | $750 - $1,200 | $3,000 |
| Tax-Exempt Organization: For Qualified Veteran Only | Up to $6,240 |
An employer must submit to the Michigan Unemployment Insurance Agency IRS Form 8550, “Pre-Screening Notice and Certification Request for the Work Opportunity Credit” and ETA Form 9061, “Individual Characteristics Form” for each newly hired employee who may qualify as a target group member. These forms are included as part of the online WOTC application.
Submit your WOTC application and supporting forms online through your Michigan Web Account Manager (MiWAM) account so your approval determinations are expedited. This ensures you receive your federal tax deduction much faster.
Forms may also be submitted by mail. Keep in mind there are considerable delays when mailing the paperwork to UIA offices.
IRS Form 8850 and ETA Form 9061 must be submitted together:
The IRS and ETA forms as well as the requirements for specific target group documentation can be found at the UIA website or the U.S. Department of Labor website.
Food stamp
Must be 18 to 39 years old on or before the hire date and a member of a family that has received SNAP benefits for the 6-month period that ends on the hire date.
Supplemental Security Income
Must be on SSI for any month ending during the 60-day period before hire date.
Short-term recipient
Must be a member of a family receiving assistance for any 9 months during the 18-month period that ends on the hire date.
Long-term recipient
Must be a member of a family who received assistance for at least 18 consecutive months ending on the hire date; or has received assistance for a total of at least 18 months, whether or not consecutive, between August 5, 1997, and the hire date and at least one payment is within two years of hire; or whose eligibility expired under a federal or state law after August 5, 1997, and was hired within two years after their eligibility expired.
To be considered a veteran, the applicant must have served on active duty for more than 180 days or have a service-connected disability, and not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hire date. Employers must provide a copy of a veteran's DD214 form for verification. In addition, the qualified veteran must meet one of the criteria below:
Can be used in conjunction with WOTC for an added tax credit. How the refundable tax credit works:
Covers job seekers who are considered high-risk due to factors in their personal backgrounds and who have been rejected by a commercial bonding company. It protects employers from any loss of money or property incurred as a result of dishonesty by high-risk workers.
