The IRS is reminding employers about eligibility for tax credits when they hire long-term unemployment recipients. 

The Work Opportunity Tax Credit has been available for some time now.

The credit has become within reach for more employers due to pandemic-related layoffs. 

The tax credit encourages employers to hire designated categories of workers who face significant barriers to employment. 

Eligible Applicants

One of the targeted groups is long-term unemployment recipients who have been unemployed for at least 27 consecutive weeks and received state or federal unemployment benefits during part or all of that time. 

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

Application Process

An employer must request certification by submitting IRS Form 8850 to the state workforce agency to qualify for the credit. 

Applications should be submitted within 28 days of an eligible worker starting with the company.

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 on or before Dec. 31, 2025.