IRS Clarifies Work Opportunity Tax Credit Prescreening
IRS officials have updated the prescreening process for hires under the federal Work Opportunity Tax Credit program.
Under the program, employers receive credits for hiring designated categories of workers who face significant barriers to employment.
Updated prescreening guidance notes that employers and job applicants must complete Form 8850, a pre screening notice on or before the day a job offer is made.
After prescreening an applicant, an employer must submit Form 8850 to the state workforce agency to qualify for the credit within 28 days of the eligible worker starting with the company.
Those who were unemployed for at least 27 consecutive weeks and received state or federal unemployment benefits during part or all of that time are among the target groups.
The other 10 groups include:
- Temporary Assistance for Needy Families recipients
- Unemployed veterans, including disabled veterans
- Formerly incarcerated individuals
- Designated community residents living in Empowerment Zones or Rural Renewal Counties
- Vocational rehabilitation referrals
- Summer youth employees living in Empowerment Zones
- Food stamp, SNAP recipients
- Supplemental Security Income recipients
- Long-term family assistance recipients
- Long-term unemployment recipients
The credit is a one-time credit for each new hire. An employer cannot claim the credit for employees who are rehired.
The credit is available for workers who begin employment on or before Dec. 31, 2025.
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