Are You Leaving Free Money on the Table? How Employers Miss Out on WOTC Credits

Most employers hate leaving money on the table.

Yet thousands do it every year without realizing it, not through bad deals or poor negotiation. Through a federal tax credit program that literally pays you to hire people you were probably going to hire anyway.

The Work Opportunity Tax Credit can deliver up to $9,600 per qualifying employee. It doesn’t reduce your payroll. It doesn’t trigger matching contributions. It’s a straight tax credit that lowers what you owe the IRS at the end of the year. 

And most employers either don’t know it exists or don’t bother implementing it.

Here’s the catch: the program expired December 31, 2025. However, Congress may reauthorize it in 2026; they’ve extended it repeatedly since 1996. But whether it comes back or not, understanding how WOTC works matters because it shows how employers systematically miss tax benefits that are hiding in plain sight.

That’s precisely the gap INFINITI HR helps clients close. As an IRS-certified PEO, INFINITI HR integrates WOTC screening and compliance directly into your hiring and payroll workflow. Here’s how our scalable solutions take the money off the table:

• Pre-screening candidates for WOTC eligibility during the hiring process, so qualifying hires get flagged before day one.
• Handling all required paperwork, including Form 8850 and ETA forms, then submitting everything to the right state workforce agency well within that critical 28-day window.
• Tracking eligible credits automatically through real-time payroll and tax filing, so nothing slips through the cracks when tax season rolls around.

Either way, understanding how WOTC works helps employers avoid missing valuable tax benefits, which is essential for strategic planning.

What WOTC Really Does

WOTC rewards employers for hiring workers from groups that historically face employment barriers. Veterans. Ex-felons. Long-term unemployed. SNAP recipients. People who’ve been on public assistance.

The federal government wants these groups to work rather than rely on benefits. So, they incentivize businesses to hire them by offering tax credits.

The amounts vary by target group:

• Veterans with service-connected disabilities who’ve been unemployed for six months can generate $9,600 in credits. 
• Former felons hired within a year of conviction or release are eligible for up to $2,400.
• SNAP recipients can deliver $2,400. 
• Long-term unemployed workers who’ve been jobless for at least 27 weeks are eligible for $2,400.

There are 10 target groups total, each with specific eligibility criteria and credit amounts.

The math works like this: for most groups, you get 40% of the first $6,000 in wages, up to $2,400. For certain veterans, the calculation can reach $9,600. The employee needs to work at least 400 hours to qualify for the full credit. If they work between 120 and 399 hours, you get 25% instead of 40%.

If you hire five qualifying employees who each work full-time, you could reduce your tax bill by $12,000 or more. For a growing business, that’s real money that hits the bottom line.

Why Employers Don’t Capture It

The problem isn’t eligibility. Most employers hire qualifying candidates regularly without realizing it.

The problem is the process. WOTC requires certification before you can claim the credit, but with a straightforward process, employers can confidently manage paperwork, deadlines, and coordination with state agencies.

WOTC requires certification before you can claim the credit. That means paperwork, deadlines, and coordination with state workforce agencies.

Here’s where it breaks down:

You have to screen candidates during the hiring process—before making an offer—using IRS Form 8850. That’s the pre-screening notice that determines whether someone might qualify. Then, within 28 days of the employee’s start date, you submit Form 8850 and ETA Form 9061 (or 9062 if they have conditional certification) to your designated state workforce agency.

Miss that 28-day window and the credit disappears. Doesn’t matter if the employee qualifies. Doesn’t matter if you were going to hire them anyway. Late paperwork means zero credit.

Most hiring managers don’t know Form 8850 exists. HR teams don’t build WOTC screening into their onboarding workflow. And even when companies try to implement it manually, something always slips through.

A manager forgets to hand out the form. An employee doesn’t complete it. The paperwork sits on someone’s desk for 30 days. By the time anyone realizes the deadline passed, it’s too late.

That’s thousands of dollars evaporating because nobody integrated WOTC into the hiring process.

The Certification Process Employers Ignore

Let’s walk through what really has to happen for WOTC to work.

During the interview or offer stage, the candidate completes Form 8850. It’s a simple questionnaire asking about veteran status, public assistance, unemployment history, and other qualifying factors.

If they check “yes” in any qualifying category, you complete the Individual Characteristics Form (ETA 9061) with supporting documentation. Veterans need DD-214s. Ex-felons need conviction or release documentation. SNAP recipients need verification from their state agency.

You submit both forms to your state’s designated workforce agency within 28 days of the hire date. The agency reviews the application and issues a certification if the employee qualifies.

Once certified, you track the employee’s hours and wages throughout their first year. When you file your annual business taxes, you claim the credit using IRS Form 5884 for taxable employers or Form 5884-C for tax-exempt organizations hiring qualified veterans.

The process isn’t complex. With consistent execution and automation, your team can confidently claim credits at every hire, turning compliance into a strategic advantage.

Industries Leaving the Most Money Behind

Some industries naturally hire more WOTC-eligible candidates than others.

Construction and skilled trades employ veterans at higher rates than most sectors. Many companies in these industries hire ex-felons who’ve completed training programs. If you’re not screening every hire for WOTC eligibility, you’re missing $2,400 to $4,800 per employee multiple times per year.

Hospitality and food service hire significant numbers of SNAP recipients and people transitioning off public assistance. These industries also have high turnover, which means more hiring opportunities and more potential credits. A restaurant hiring 20 employees per year might qualify for $20,000 to $40,000 in credits annually.

Warehousing, logistics, and manufacturing face similar dynamics. These sectors employ veterans, people with limited work history, and individuals coming off long-term unemployment. The credits add up fast when you’re hiring dozens or hundreds of people.

Even professional services miss opportunities. Veterans transition into tech, finance, and corporate roles regularly. Someone with a service-connected disability who’s been job searching for six months could generate $9,600 in credits when you hire them for a $70,000 salary. That’s more than a 10% return on first-year compensation from tax credits alone.

The commonality across all these industries? They’re hiring qualifying people already. They just aren’t capturing the credits.

Automation Fixes the Compliance Problem

Manual WOTC administration doesn’t scale.

You can’t expect hiring managers to remember forms. You can’t rely on candidates to know whether they qualify. And you definitely can’t count on someone manually tracking 28-day deadlines for every new hire.

The solution is automated screening integrated into your applicant tracking system or onboarding workflow.

When a candidate applies or receives an offer, they automatically get Form 8850 as part of the standard paperwork. The system flags qualifying responses, generates the necessary documentation, and submits everything to the state agency within the deadline.

If certification is approved, the system automatically tracks hours and wages. When tax season arrives, it calculates the exact credit amount using data from your payroll system.

This isn’t theoretical. Payroll providers and WOTC specialists offer these services. They screen millions of applicants per year, handle all the paperwork, and ensure deadlines are met. The cost is typically a percentage of the credits claimed, so you only pay when you actually receive the funds.

For companies hiring frequently, this pays for itself immediately. For those hiring occasionally, it’s still worth implementing because missing even one $9,600 credit hurts more than the administrative cost of automation.

State-Specific Variations That Complicate Things

WOTC is a federal program, but states administer it differently.

Some states process certifications quickly. Others take months. Some accept electronic submissions. Others require paper forms mailed to specific addresses.

A few states offer their own tax credits that stack on top of WOTC. California has the New Employment Credit for businesses in designated areas. Others have credits for hiring veterans, ex-felons, or people with disabilities that can be claimed alongside federal WOTC.

If you operate in multiple states, compliance gets messier. Each state has its own workforce agency, submission process, and timelines. What works in Ohio doesn’t necessarily work in Texas.

That’s another reason automation matters. A good WOTC partner knows every state’s requirements, handles submissions correctly, and tracks credits across jurisdictions. Trying to manage that internally means hiring someone whose full-time job is navigating state-specific WOTC regulations.

Most companies would rather focus on running their business.

What Happens if Congress Reauthorizes WOTC

The program expired on December 31, 2025. State workforce agencies are accepting applications for hires from 2025, but they won’t issue certifications for 2026 hires unless Congress reauthorizes the program.

Historically, WOTC gets extended every few years. It’s bipartisan because it reduces government spending on assistance programs while helping businesses lower costs. Both sides claim credit for supporting workforce development and job creation.

If reauthorization happens, it could include retroactive provisions allowing employers to claim credits for hires made during the lapse. But counting on retroactive credits is risky. Better to have systems ready so that, when the program returns, you can capture credits immediately rather than scrambling to implement processes months later.

And if WOTC doesn’t come back? The broader lesson still applies. Tax credits exist. Employers who build systems to capture them consistently outperform those who don’t.

The difference between companies that leave money on the table and those that don’t isn’t sophistication. It’s a process.

Building the Habit of Claiming Credits

WOTC isn’t the only tax credit available to employers.

The Research and Development Credit rewards companies for innovation and product development. The Employee Retention Credit helped businesses during COVID. State-level credits cover everything from hiring in designated zones to investing in renewable energy.

Most employers miss these, too. Not because they’re ineligible. Because nobody in the organization is systematically looking for credits, documenting eligibility, and filing the necessary forms.

The companies that consistently benefit from tax credits treat them like any other business process. They assign ownership. They integrate documentation into existing workflows. They use software to track eligibility and calculate amounts. And they work with specialists who stay current on program changes.

When preparing your business for HR regulation changes or updating compliance checklists, tax credit eligibility should be part of the conversation. Not as an afterthought. As a standard component of hiring and payroll operations.

Whether WOTC returns in 2026 or not, the pattern repeats: employers who build systems to capture available benefits outperform those who assume someone else is handling it.

The Bottom Line

WOTC offered up to $9,600 per qualifying employee for businesses that hired veterans, ex-felons, SNAP recipients, and other workers facing employment barriers. It expired December 31, 2025, but may be reauthorized by Congress.

Employers missed billions in credits, not because they couldn’t qualify, but because they lacked a process to capture them. Manual administration fails. Automated screening and submission through payroll providers or WOTC specialists works.

Even if WOTC stays expired, the lesson matters. Tax credits reward specific behaviors—hiring, investing, innovating. Companies that systematically identify and claim these benefits gain financial advantages that their competitors don’t.

Want help identifying tax credits and building effective employee engagement strategies that position your business for every available benefit? Contact INFINITI HR to discover how strategic HR partnerships maximize both compliance and financial opportunity.

Want more on current employment trends?

Check out the recent blog, The Payroll and Benefits Reset: Proven Tactics from Industry Pros to Help Prevent Errors, Delays, and Compliance Risk, or come back for additional pieces on human resources, payroll, insurance, and benefits.