December 20, 2011
Tax credit benefits employers for hiring job seekers in need
The Work Opportunity Tax Credit program provides an incentive for employers to hire job seekers who meet a particular set of qualifications. The benefit to employers is reduced cost, and little paperwork is required to qualify. Helping job seekers in need to find and retain good jobs and gain on-the-job experience benefits all employers and increases America’s economic growth and opportunity.
The success and growth of this income tax credit for private-sector businesses depends on a strong public and private-sector partnership. In recent years, as Congress has introduced new target groups in the Work Opportunity Tax Credit program, use has increased significantly. During 2010’s fiscal year, over 849,000 certifications were issued by the state workforce agencies.
At the end of 2010, President Obama signed the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act, which extended the Work Opportunity Tax Credit program. Currently, the employer's tax credit can be as much as:
- $2,400 generally for each new adult hire
- $1,200 for each summer youth hire
- $4,800 for each new disabled veteran hire
- $9,000 for each new long-term TANF (Temporary Assistance for Needy Families) recipient hired over a 2 year period
There are nine groups of job seekers which, when hired from, can result in a WOTC:
- Long-term TANF recipient
- Other TANF recipient
- 18-39 year old SNAP (food stamps) recipient
- 18-39 year old designated community resident (individual who lives within an Empowerment Zone or Rural Renewal County)
- 16-17 year old summer youth
- Vocational rehabilitation referral
- SSI recipient
By participating in the WOTC Program, employers make the hiring decision, complete minimal paperwork to claim the tax credit, and can hire as many new individuals who qualify for these tax savings. However, some employees do not qualify the employer for the WOTC, including relatives and dependents, majority owners of the employer, or former employees.
For more information on the WOTC, you can contact your state coordinator at 614.644.0966 or visit the WOTC website, http://www.doleta.gov/business/Incentives/opptax.