How Restaurants Can Use WOTC to Reduce Hiring Costs

If you run a restaurant, you're probably no stranger to high turnover and a constant cycle of hiring. From dishwashers to line cooks to hosts, it feels like you're constantly hiring…and rehiring. Between training, turnover, and tight margins, even a single bad hire stings.

But what if some of those hires could pay you back?

At Whirks, we’ve worked with dozens of restaurant owners who didn't realize tax credits applied to them. Turns out, one federal tax credit—the Work Opportunity Tax Credit (WOTC)—was practically designed for restaurants.

In this article, you'll find out if WOTC is worth it for your restaurant. We'll show you how it works, which hires qualify, and how much you could save. And, we'll explain how to make it part of your hiring process.

What Is the Work Opportunity Tax Credit (WOTC)?

The WOTC is a federal tax credit available to employers who hire individuals from specific groups that face barriers to employment. These can include veterans, people receiving government assistance, and even young adults living in designated areas.

For restaurants, WOTC can offset the cost of high turnover by giving you a credit of up to $9,600 per qualifying employee.

Key takeaway: WOTC rewards you for hiring the people you're likely already hiring.

Which Restaurant Roles Typically Qualify?

In restaurants, many front- and back-of-house hires fall into WOTC-eligible categories. Common examples include:

• Hosts, bussers, servers from designated low-income areas
• Line cooks and dishwashers who receive SNAP (Supplemental Nutrition Assistance Program) or TANF (Temporary Assitance for Needy Families) assistance
• Veterans re-entering the workforce
• Seasonal or part-time workers from underrepresented groups

Key takeaway: If you’re hiring entry-level roles, odds are you already have WOTC-eligible employees and you just haven’t filed the paperwork. And this means you're leaving money on the table.

How WOTC Works for Restaurant Owners

Here’s how the process typically works:

1. Pre-screen applicants using IRS Form 8850 before or on the day of the job offer.
2. Submit paperwork to your state workforce agency within 28 days of the hire date.
3. Track hours and wages since the credit is based on hours worked and wages earned.
4. Claim the tax credit when you file your business taxes.

Heads up: If you miss that 28-day deadline, you miss the credit. No exceptions.

Common WOTC Mistakes Restaurants Make

We’ve seen a few pitfalls trip up even the savviest restaurant owners, so here are a few common errors to avoid:

• Missing the 28-day deadline
• Assuming part-time employees don't count
• Forgetting to screen seasonal hires
• Not collecting proper documentation
• Thinking you can only claim once per year
• Thinking it's "just for big chains"

This credit is for your restaurant. Whether you run one location or five, WOTC can work for you, as long as you follow the right steps.

How Much Could You Save?

The tax credit per qualifying employee ranges from $1,200 to $9,600, depending on their category and hours worked. 

The credit amount depends on the employee category and hours worked. Here's how it typically breaks down:

• 40% of qualified wages if the employee works 400+ hours in their first year
• 25% of qualified wages if the employee works 120-399 hours

Example:
Let's say you hire five qualifying employees who each earn at least $6,000 and work over 400 hours. That’s $2,400 per employee, totaling $12,000 in tax credits just for following a simple process and filing the right paperwork.

If you regularly hire 10–15 team members per year who qualify and match the specifications in this example, you could see $24,000-$36,000 back in tax savings.

How to Start Using WOTC in Your Restaurant

You don’t need to overhaul your entire hiring process. You just need to add a few steps:

1. Identify qualifying roles (think: entry-level, high turnover).
2. Add a WOTC screening form (Form 8850) to your onboarding packet.
3. Partner with your payroll provider or a tax professional to handle submissions.
4. Track wages and hours worked and claim the credit when you file your taxes.

Pro tip: Some payroll platforms automate WOTC filing. Ask your provider if it's built in, or work with a partner (like Whirks) who can help.

Don't Let WOTC Credits Slip Through the Cracks for Your Restaurant

You’re already doing the hard part: finding people willing to work in a fast-paced, high-turnover industry. Why not get rewarded for it?

If your restaurant feels like it’s always rehiring and always running on razor-thin margins, WOTC can put real dollars back in your pocket.

At Whirks, we help restaurant owners like you simplify hiring, reduce costs, and make tax credits part of your process. If you want help screening, filing, or automating WOTC, we’ve got your back.

Still have questions about WOTC?

Read: 8 Questions Answered About WOTC
We cover the fine print, time limits, and common misconceptions, so you can move forward with confidence. And when you're ready...