written by Jay Logal
With the economic conditions beginning to move in a positive direction many employers may find themselves needing to hire additional workers. The hiring of these new employees may qualify you for the Work Opportunity Tax Credit.
The Work Opportunity Tax Credit is a credit that employers can take against their federal income tax liability. The credit is designed to encourage the employment of certain disadvantaged groups.
The groups are as follows:
– A member of a family that is a recipient of Temporary Assistance to Needy Families (TANF). Each state has a different name for this program.
– A qualified veteran.
– A qualified ex-felon.
– A designated community resident.
– A vocational rehabilitation referral.
– A qualified summer youth employee
– A qualified food stamp recipient.
– A recipient of Supplemental Security Income (SSI) benefits.
– Hurricane Katrina employee.
– A qualified unemployed veteran.
– A qualified disconnected youth.
The maximum amount of credit available is dependent upon the group the employee is a member of. A new summer youth hire has a maximum credit of $1,200, while a new long-term family assistance recipient hired over a two year period has a maximum credit of $9,000. The two groups in between have a maximum credit of $2,400 for each new adult hire, and $4,800 for each new disabled veteran hire.
The credit is claimed using IRS Form 8850 and ETA Form 9061. The Forms 9061 are submitted to your state workforce agency PRIOR to hiring someone who may qualify. Click here to view this on the WOTC State Directory website.
Please contact us for more information on the Work Opportunity Tax Credit.