What is WOTC?
WOTC is a Federal tax credit
available to employers who hire and retain veterans and individuals from other
target groups with significant barriers to employment. Employers claim about $1
billion in tax credits each year under the WOTC program. There is no limit on
the number of individuals an employer can hire to qualify to claim the tax
credit, and there are a few simple steps to follow to apply for WOTC.
The tax credit employers can claim
depends upon the target group of the individual hired, the wages paid to that
individual in the first year of employment, and the number of hours that
individual worked. There is also a maximum tax credit that can be earned.
For the long-term Temporary
Assistance for Needy Families (TANF) target group only, the credit is available
to employers who hire members of this group for up to a two-year period.
· In
the first year, the employer may claim a tax credit equal to 40% of the
first-year wages, up to the maximum tax credit, if the individual works at
least 400 hours.
· In
the second year, the employer may claim a tax credit equal to 50% of the
second-year wages, up to the maximum tax credit, if the individual works at
least 400 hours.
For all other target groups, the
credit is available to employers who hire members of these groups, based on the
individual's hours worked and wages earned in the first year.
· If
the individual works at least 120 hours, the employer may claim a tax credit
equal to 25% of the individual's first year wages, up to the maximum tax
credit.
· If
the individual works at least 400 hours, the employer may claim a tax credit
equal to 40% of the individual's first year wages, up to the maximum tax
credit.
Who can I Hire?
· Veterans
· TANF
Recipients
· SNAP
(Food Stamp) Recipients
· Designated
Community Residents (living in Empowerment Zones or Rural Renewal Counties)
· Vocational
Rehabilitation Referral
· Ex-felons
· Supplemental
Security Income Recipients
· Summer
Youth Employee (living in Empowerment Zones)
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