On May 25, 2007, the President signed into law the Small Business and Work Opportunity Tax Act which extends the WOTC Program. This tax credits applies to all convicted felons and each company choosing to employ felons are qualified to receive it. The tax credit awards employers with a tax credit up to $2,400.00 per felon employed. The actual amount credited is calculated on how many hours the employee actually worked and for how long the employment lasted.
An employer must request and receive from its state workforce agency (SWA) that the new hire is a convicted felon before the employer can claim the WOTC on its federal income tax return. The employer must complete page 1 of IRS Form 8850, Pre-Screening Notice and Certification Request for Work Opportunity Credit, by the date of the job offer and page 2 of IRS Form 8850 after the individual is hired.