| Tax Credit Information
On March 9, 2002 the Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) reauthorized the Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit. The Act extended the tax credits for a 24-month period through December 31, 2003, and is retroactive to the credits' earlier expiration date of December 31, 2001.
Three tax credits are available to employers who hire eligible DC residents.
Welfare-to-Work Tax Credit
This credit is for hiring long-term welfare recipients as much as $8,500 per new hire: 35% of qualified wages for the first year and 50% for the second year of employment. Qualified wages which include health plans as well as educational and dependent assistance programs are capped at $10,000 per year. To qualify employers for this tax credit, new hires must begin work any time after July 1, 1999 and must be employed at least 400 hours or 180 days.
Work Opportunity Tax Credit
This credit is for hiring all WOTC target groups, except Summer Youth employees, is up to $2,400 for each new hire: 40% of qualified first-year wages for those employed 400 or more hours; 25% for those employed at least 120 hours. Qualified wages are capped at $6,000. Summer Youth wages are capped at $3,000.
To apply for the Welfare-to-Work and Work Opportunity Tax Credits in the District of Columbia, businesses must:
- Complete IRS Form 8850: Work Opportunity Credit Pre-Screening Notice and Certification request. Form 8850 must be postmarked no later than the 21st day after the employee's start date. You can get IRS Form 8850 by downloading it in PDF format from the Internal Revenue Service* or by calling 1-800-829-3676.
- Complete US Department of Labor Form ETA-9061: Individual Characteristics Form* and all supporting documentation, or Form ETA-9062: Conditional Certification, if available. Mail the form and documentation as soon as possible.
DC Employment Tax Credit
Effective January 1, 1998, District businesses may claim a new $3,000 DC Employment Tax Credit. The credit is triggered by the employment of any District resident at a facility located within the DC Enterprise Zone. The credit, which is equal to the $3,000 or 20% of the first $15,000 of wages, may be claimed for each qualified employee during each of the five tax years ending on or before December 31, 2002.
The DC Employment Tax Credit is applicable to existing and new employees and is available for wages paid. It is intended to provide an attractive incentive to employers by financing worker education and job readiness skills, and by rewarding businesses that employ District residents.
Businesses may claim the credit directly by submitting IRS Form 8844* with their annual tax filing.
For more information about Federal and Local Tax Credits, please contact:
DC Department of Employment Services
WOTC/WtW Unit
609 H Street, NE, Room 530
Washington, DC 20002
(202) 698-5849
For more information about the Welfare-to-Work and Work Opportunity Tax Credits, please visit Department of Labor.
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