The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have faced significant barriers to employment. The regulations are set by the IRS and the U.S. Department of Labor and are administered by Iowa Workforce Development (IWD).
Program Updates
The WOTC was authorized until December 31, 2025 (Section 113 of Division EE of P.L. 116-260 -- Consolidated Appropriations Act, 2021). As such, the legislative authority for all WOTC targeted groups expired on December 31, 2025, unless/until it is reauthorized by Congress. At this time, the U.S. Department of Labor/Employment and Training Administration (ETA) has no indication of whether Congress will pass legislation reauthorizing the WOTC.
WOTC Hiatus Processing Guidance
ETA’s WOTC Procedural Guidance, Training and Employment Guidance Letter (TEGL) 16-20, Change 1 specifies that “States can continue to review and prepare WOTC certification requests when there is a WOTC authorization lapse but may not issue a certification.” Consistent with that guidance, during a lapse, Iowa Workforce Development (IWD) must only issue certifications for individuals who begin work for an employer on or before December 31, 2025.
During an authorization lapse, IWD will adhere to the following procedures, consistent with ETA’s WOTC Procedural Guidance:
IWD will accept and fully process (i.e., issue certifications or denials) for all timely submitted WOTC certification requests for individuals with start dates on or before December 31, 2025 (the “start date” provided on the IRS Form 8850).
For individuals who begin work on or after January 1, 2026, IWD will accept and retain certification requests submitted via iowaworks.gov and, alternatively, by mail, utilizing OMB-approved IRS and ETA WOTC Processing Forms. IWD will not issue certifications with respect to these certification requests until otherwise informed by ETA. IWD will adhere to any additional guidance provided by ETA if Congress subsequently reauthorizes WOTC and provides certain legislative provisions that allow for retroactive certification of targeted groups for individuals who began work during the lapse.
Apply for The Work Opportunity Tax Credit (WOTC)
Read the following steps to learn how to apply for the Work Opportunity Tax Credit (WOTC).
WOTC applies currently only to new employees hired through 12/31/2025. The new employee must belong to one of the following target groups:
TANF Recipients: A member of a family receiving Temporary Assistance to Needy Families (TANF). The employee must have received benefits for some 9-month period during the 18 months ending on the hiring date.
Qualified Veteran (any of the following):
A veteran AND a member of a family receiving SNAP for at least 3 months during the 15 months preceding the hiring date.
A veteran who is entitled to compensation for a service-connected disability and who was hired not more than one year after he/she was discharged or released from active duty in the U.S. Armed Forces.
A veteran who is entitled to compensation for a service-connected disability and who has been unemployed for a period or periods totaling at least six months during the year that ends on the hiring date.
A veteran unemployed at least four weeks (whether or not consecutive) or six months or more (whether or not consecutive) in the year prior to being hired.
Ex-Felons:  Someone convicted of a felony or released from prison for a felony within one year of the date of hire.
Designated Community Resident
On the date of hiring, an individual who is at least 18 years old and under 40 AND who resides in a Rural Renewal County AND continues to reside at the location after employment.
An individual who has a physical or mental disability and has been referred to the employer while receiving or upon completion of rehabilitative services under one of the following:
A state rehabilitation plan.
An Employment Network Plan under the Ticket to Work Program.
A program carried out under the Department of Veterans Affairs.
SNAP Recipients: An individual who is 18 to 39 years old AND a member of a family that has received food stamps for the last six months.
Supplemental Security Income (SSI) Recipients: An individual who received SSI benefits for any month within the last 60 days ending on the hire date.
Long-term Family Assistance Recipients (LTFA):  A member of a family that:
Received TANF payments for at least 18 consecutive months ending on the hiring date OR;
Received such family assistance for a total of at least 18 months (whether or not consecutive) after August 5, 1997, if the individual is hired within two years after the date that the 18-month total is reached OR;
Stopped being eligible for assistance after August 5, 1997, due to federal or state law limits, and the individual is hired not more than two years after such eligibility for assistance ends.
Long-term Unemployed Recipient (LTUR): An individual who has been unemployed for not less than 27 consecutive weeks at the time of hiring and who has received unemployment compensation during some or all of the unemployment period.
The job applicant must complete, sign and date page 1 of the IRS Form 8850 on or before the day the job is offered.
IRS Form 8850, page 2
When the decision to hire is made, the employer must complete page 2 (employer section) of IRS Form 8850.
The IRS Form 8850 is considered a critical form. This form must be fully completed and submitted to Iowa Workforce Development (IWD) within 28 calendar days after the employee’s start date. Form 8850 submitted after 28 days will be denied.
ETA Form 9061 may be completed by the job applicant, the employer, or the employer’s authorized representative. If the applicant is a minor, the parent or guardian must sign the form.
The applicant sections (boxes 6-23) of ETA Form 9061 must be completed on or before the first day of work.
The employer will complete the employer sections (boxes 3-5).
The individual completing the form will sign and date it (boxes 23 (a) (b) and 24).
The preferred method for submitting applications is to use Iowa’s online WOTC portal, IowaWORKS.gov. All supporting documentation will be uploaded to the online system.
Applications may also be submitted by:
Mail: IowaWORKS Center, WOTC Unit, 1000 E. Grand Ave., 50319
IRS Form 8850 must be submitted or postmarked within 28 calendar days after the employee’s start date. Forms 8850 not submitted within 28 calendar days will be denied by IWD.
Iowa Workforce Development will issue a final determination for each WOTC application.
If more information is required, IWD will issue a request for additional information or documentation (Denial Pending More Information).
The final determination indicates if the new employee is certified as meeting the eligibility for one of the WOTC target groups.
If the WOTC application is not able to be verified for eligibility, IWD will issue a denial with an explanation.
Appealed - The denial or certification for this application has been appealed by the employer or third-party agent.
Certified - Application has been certified. Appeals must be received within one year of the issuance date of the certification.
Denial Pending More Information - A request for information or documentation has been made to the employer. An application that remains in this status for more than 90 days will be denied.
Denied - Application has been denied. Appeals must be received within one year from the date the denial is issued.
Incomplete 8850 - IRS Form 8850 must be completed and submitted; the employer or third-party agent must contact Iowa Workforce Development for assistance in completing the form. Applications in this status exceeding the 28-day rule will be denied.
Pending - A request for verification documents has been submitted to another agency or state. An application in this status more than 120 days will be denied.
Pending 9061 - ETA Form 9061 has not been completed and submitted; the employer or third-party agent needs to contact Iowa Workforce Development for help completing the form.
Submitted 8850 and 9061 - The application has been submitted to the state and will be processed by a Certification Officer.
You will need to file for the credit with the IRS.
Once your business receives a certification from IWD, you may file for the tax credit with the IRS.
Generally, an employer elects to take the credit by filing IRS Form 5884, Work Opportunity Credit.
Your company also must meet a requirement known as the Minimum Employment Period, which is the number of hours an employee is required to work – at least 120 hours in the first year of employment –before you can file and qualify for the tax credit on that employee.
