To all business owners – we know having your own business can add up costs quickly. We want to make sure you are aware of any and all tax credits available to you.
Did you know there is a tax credit available to small businesses for hiring long-term unemployment recipients and also other categories of works with employment barriers?
The Work Opportunity Tax Credit (WOTC)
This is an income tax benefit that encourages employers to hire different categories of workers who face employment barriers. For example, one of the newer categories of workers are those who have been unemployed for at least 27 weeks and received either state or federal unemployment benefits during part (or even all) or that time.
How do you qualify?
This credit can be claimed on Form 5884 and is based on wages paid to eligible workers during their first two years of employment with your business.
You must first request certification by filing IRS Form 8850 with the state workforce agency within 28 days after the new worker begins.
According to the IRS website, their are 10 categories of WOTC-eligible workers. This includes:
- Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
- Unemployed veterans
- Designated community residents living in a.) Empowerment Zones or b.) Rural Renewal Counties
- Vocational rehabilitation referrals
- Summer youth employees living in Empowerment Zones
- Long-term family assistance recipients
- Qualified long-term unemployment recipients
- Food Stamp recipients
- Supplemental Security Income (SSI) recipients
If you do qualify, you would claim the WOTC on your income tax returns. If you need help determining if you would qualify, just ask the #GoldenGirls.