WOTC can reduce employer federal tax liability when the employer hires
from targeted groups of job seekers who begin work before September 1, 2011. It
is one tool in a diverse toolbox of flexible strategies designed to help those
job seekers most in need of employment to gain on-the-job experience and move
towards economic self-sufficiency.
The WOTC program is only for new hires and annual tax credits for hiring most
target group members can receive as much as:
$2,400 for each new adult hire;
$1,200 for each new summer youth hire; and
$4,800 for each new disabled veteran hire; and
$9,000 for each new long-term family assistance recipient hired over a two-year
period.
All new adult employees must work a minimum of 120 and up to 400 hours may be
applied toward the tax credit. Individuals hired as Summer Youth employees must
work at least 90 days, between May 1st and Sept. 15th, before an employer is
eligible to claim the tax credit.
WHAT NEW HIRES CAN QUALIFY EMPLOYERS FOR WOTC?
WOTC applies to new hires who begin work between January 1, 2006 and August
31, 2011 and that belong to one of the following target groups:
Target Group A (Welfare Recipients) - Any individual
who has received financial benefits under the AFDC (Aid to Families with
Dependent Children) or the successor program, TANF (Temporary Aid to Needy
Families). The employee must have received at least any 9 months of benefits
within an 18 month period dating back from their hire date. If the employee
has received benefits from another state, identify that state on the form 9061
(Individual Characteristics Form). This tax credit for new hires employed 400
or more hours is 40% of qualified wages for the first year of employment; the
credit for new hires employed 120 to 399 hours is 25%. Qualified wages are
capped at $6,000.
Target Group B (Veteran Food Stamps) - Veterans who are
members of a family that received food stamps for at least three consecutive
months during the 15 months prior to date of hire. Documentation such as the
Veterans DD 214 or other forms of official documentation is needed to
establish proof of service. This tax credit for new hires employed 400 or more
hours is 40% of qualified wages for the first year of employment; the credit
for new hires employed 120 to 399 hours is 25%. Qualified wages are capped at
$6,000.
Target Group C (Disabled Veterans) - An expansion of
the Veterans targeted group which includes a Veteran who is certified as
entitled to compensation for a service-connected disability and having a hire
date which is not more than one year after having been discharged or released
from active duty in the Armed Forces of the United States or having been
unemployed for six months or more (whether or not consecutive) during the one
year period prior to the hire date. A service-connected disability is defined
as having a disability rating of 10 percent or higher according to Section 101
of Title 38, U.S.C. Qualified first- year wages for this category are $12,000.
Target Group D (Ex Felons) - An individual who has been
convicted of a felony and/or has been released from incarceration within the
previous 12 months from date of hire. If the individual was sentenced directly
to probation, work release, community corrections without being incarcerated,
a letter from the case worker, parole officer, or halfway house to document
the status is required. Information can be added to form 9061 in block 17 or
19 to assist in obtaining the required documentation to certify the applicant.
Date of birth is necessary for this category. This tax credit for new hires
employed 400 or more hours is 40% of qualified wages for the first year of
employment; the credit for new hires employed 120 to 399 hours is 25%.
Qualified wages are capped at $6,000.
Target Group E (Designated Community
Residents-DCR) - A
DCR is an individual that is certified by the SWA as having attained the age
of 18 but not 40 on the hire date and his /her principal place of abode is
within an EZ, RC or Rural Renewal County (RRC). RRCs are defined as any county
that is outside a metropolitan statistical area (MSA) defined as such by the
OMB and had a net population loss during the five year periods of 1990-1994
and 1995-1999. This tax credit for new hires employed 400 or more hours is 40%
of qualified wages for the first year of employment; the credit for new hires
employed 120 to 399 hours is 25%. Qualified wages are capped at $6,000.
Target Group F (Vocational
Rehabilitation) - Any
person who is currently receiving rehabilitative services, or has completed
services within 2 years of the hire date. These individuals need to have an
IWPE (Individualized Written Plan of Employment) to support those services
rendered under the Rehabilitation act of 1973 or under Chapter 31 of Title 38,
U.S. Code. This now includes work plans that have been developed and
implemented through an Employment Network. This tax credit for new hires
employed 400 or more hours is 40% of qualified wages for the first year of
employment; the credit for new hires employed 120 to 399 hours is 25%.
Qualified wages are capped at $6,000.
Target Group G (Food Stamps) - Any individual who is 18
thru 39 years old and is a member of a family that is receiving Food Stamps.
The recipient must have received 6 continuous months of benefits under the
Food Stamp Act of 1977 dating back from the hire date. In addition, the
recipient can qualify by being an able-bodied adult without dependents if they
received 3 continuous months of Food Stamps within the previous 5 months
dating back from the hire date. If the new hire received benefits in a state
other than Utah, indicate which state on the ETA for 9061, Individual
Characteristics Form. This tax credit for new hires employed 400 or more hours
is 40% of qualified wages for the first year of employment; the credit for new
hires employed 120 to 399 hours is 25%. Qualified wages are capped at $6,000.
Target Group H (SSI recipients) - Individuals who
received Supplemental Security Income benefits for any month during the 60
days prior to date of hire. This tax credit for new hires employed 400 or more
hours is 40% of qualified wages for the first year of employment; the credit
for new hires employed 120 to 399 hours is 25%. Qualified wages are capped at
$6,000.
Target Group I (Long Term TANF
Recipients) - Formerly
referred to as the Welfare to Work Credit. This tax credit is merged under the
WOTC Tax Credit by Bill HR2206. A Long Term TANF recipient who is a member of
a family that received Temporary Assistance for Needy Families (TANF) for at
least 18 consecutive months ending on the hire date, or a member of a family
whose TANF eligibility expired under Federal or State law after August 5, 1997
and no more than 2 years before the hire date, or whose family received TANF
for any 18 months after August 5, 1997 and the 18th month of benefits ended no
more than 2 years before the hire date. The tax credit for category I new
hires employed 400 or more hours or 180 days is 40% of qualified wages for the
first year of employment and 50% for the second year. Qualified wages are
capped at $10,000 per annum; they include tax-exempt amounts received under
accident or health plans as well as educational assistance and dependent
assistance programs.
Target Group J (Unemployed Veterans) – -- individual who is certified as:
1) having served on active duty (other than active duty for training) in the
Armed Forces of the United States for a period of more than 180 days, or
2) having been discharged or released from active duty in the Armed Forces
for a service-connected disability. Section 51(d)(14)(B)(i) of the Recovery Act provides that
the term “unemployed veteran” means any veteran who is certified by the
designated local agency as:
1. having been discharged or released from active
duty in the Armed Forces at any time during the 5-year period ending on the
hiring date; and
2. being in receipt of unemployment compensation under State or Federal
law for not less than four weeks during the one-year period ending on the
hiring date.
Target Group K (Disconnected Youth) – individual who is certified as:
having attained age 16 but not age 25 on the hiring
date,
not regularly attending any secondary, technical, or
post-secondary school during the 6-month period preceding the hiring date,
not regularly employed during such 6-month period,
and
not readily employable by reason of lacking a sufficient number of basic
skills.
HOW CAN EMPLOYERS PARTICIPATE IN THE WOTC?
Employers must apply for and receive certification from the Utah Department
of Workforce Services WOTC Unit, verifying that their new hire is a member of a
WOTC target group before they can claim the WOTC on their federal tax return.
Utah does not accept ETA Form 9062 "Conditional Certifications".
To apply for WOTC certification, employers need only:
Complete the one-page U.S. Department of Labor ETA
Form 9061, "Individual Characteristics Form".
The State WOTC office must receive the forms, with original signatures,
within 28 calendar days of the new hire's start date, either through U.S. Mail
or hand delivery.
The Utah Department of Workforce Services
WOTC Unit,
P.O. Box 45249
140 East 300 South
Salt lake City, Utah 84145-0249
Lanelle Windley
WOTC Coordinator
Phone: 801-526-9480 or
1-800-859-3203
OR
email: lwindley@utah.gov
The Work Opportunity Tax Credit is claimed on Form 5884. (The instructions are included with the form)
You may also need to file Form 3800, the General
Business Credit form in order to claim credit. Please note that "Instructions for Form
3800" are separate.
You may also obtain forms and instructions at http://www.irs.gov/ or, you can have them mailed
to you by calling 1-800-829-3676. Tax Law Questions should be directed to
the IRS or to your tax attorney.