WOTC INFORMATION PACKET

Transcription

1 WOTC INFORMATION PACKET North Carolina Department of Commerce

2 Work Opportunity Tax Credit WOTC is a Federal tax credit incentive that Congress provides to private-for-profit businesses for hiring individuals from "target groups" who have consistently faced significant barriers to employment. The main objective of this program is to enable persons in these target groups to become employed and gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing tax payers, while the participating employers are compensated by being able to reduce their federal income tax liability. What are the Target Groups? TANF Recipient A member of a family that is receiving or recently received Temporary Assistance to Needy Families (TANF) benefits for any 9-month period during the 18-month period ending on the hiring date. Veterans receiving Supplemental Nutrition Assistance A member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least a 3-month period ending during the 15-month period ending on the hiring date. Veterans with a Service-Connected Disability Entitled to compensation for a service-connected disability and hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces. Veterans with a Service-Connected Disability unemployed at least 6 months Entitled to compensation for a service-connected disability and unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date. Veterans unemployed at least 4 weeks Unemployed for a period or periods totaling at least 4 weeks (whether or not consecutive) but less than 6 months in the 1-year period ending on the hiring date. Veterans unemployed at least 6 months Unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1- year period ending on the hiring date. To be considered a veteran, the individual must have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability, and not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date. Ex-Felon An individual who has been convicted of a felony and has a hiring date which is not more than one year after the last date on which he was convicted or released from prison.

3 Designated Community Resident An year old resident of one of the federally designated Empowerment Zone (EZ), Enterprise Community (EC). (Currently not available in North Carolina) Vocational Rehabilitation Recipient An individual who completed or is completing rehabilitative services from a State certified agency, an Employment Network or the U.S. Department of Veterans Affairs. Summer Youth A year old EZ/EC resident hired between May 1 and September 15. (Currently not available in North Carolina) Food Stamp Recipient An year old member of a family that received Food and Nutrition (Food Stamp) benefits for the past 6 months, or received Food and Nutrition benefits for at least 3 of the past 5 months. Supplemental Security Income Recipient A recipient of Supplemental Security Income (SSI) benefits for any month ending during the past 60- day period ending on the hire date. Long-term TANF Recipient A member of a family that receives or recently received TANF payments for at least 18 consecutive months ending on the hiring date, or received TANF payments for any 18 months (whether or not consecutive) beginning after August 5, 1997, and the earliest 18-month period beginning after August 5, 1997 ended during the past 2 years, or stopped being eligible for TANF payments during the past 2 years because federal or state law limited the maximum time those payments could be made. TAX CREDIT AMOUNTS AND RETENTION PERIODS For most target groups, the tax credit can be as much as $2,400 per eligible employee. The tax credit amount is based on qualified wages paid to the new employee for the first-year of employment. Generally, qualified wages are capped at $6,000. The credit is 25% of qualified of qualified first-year wages for those employed at least 120 hours and 40% for those employed 400 hours or more. For Veterans with a Service-Connected Disability, the tax credit can be as much as $4,800 with 40% of qualified wages capped at $12,000. The tax credit for Veterans with a Service-Connected Disability unemployed for at least 6 months can be as much as $9,600 with 40% of qualified wages capped at $24,000. When it comes to Veterans unemployed for at least 4 weeks, the tax credit can be as much as $2,400 with 40% of qualified wages capped at $6,000. With Veterans unemployed for at least 6 months, the tax credit can be as much as $5,600 with 40% of qualified wages capped at $14,000.

4 For Long-Term TANF Recipients, the tax credit can be as much as $9,000 with qualified wages capped at $10,000 for a combined two-year period. For Summer Youth, the tax credit can be as much as $750 during the 90-day period of employment with wages capped at $3,000. How can employers participate in the WOTC program? To receive certification that a new employee qualifies for this tax credit, the employer must: 1. Complete page one of IRS Form 8850 by the day the job offer is made 2. Complete page two of IRS Form 8850 after the individual is hired. 3. Complete either the one page ETA Form 9061 or Form 9062 as appropriate. For example: If the new employee has already been conditionally certified as belonging to a WOTC target group by a State Workforce Agency (SWA) or participating agency, complete the bottom part of ETA Form 9062, sign and date, or If the new employee has not been conditionally certified, the employer and the new employee must complete, sign and date ETA Form Mail the completed and signed IRS and ETA forms to the employer's SWA within 28 days after the employee's employment -start date for all individuals who begin work for an employer on or after January 1, How do I get more information about WOTC? For more information contact the WOTC Coordinator at: NC Department of Commerce ATTN: WOTC 4316 Mail Service Center Raleigh, North Carolina Phone: (919) Fax (919)

5 Work Opportunity Tax Credit (WOTC) Introduction/Letter of Intent Dear Employer: This will introduce you to who appears to be eligible under the Work Opportunity Tax Credit (WOTC) Program. WOTC is a program that entitles employers to substantial reductions in their federal taxes when they hire eligible workers. The tax credit you may receive could be as much as $2400 per eligible WOTC applicant or as much as $9000, over two years, per eligible Long-Term Family Assistance Recipient. For Veterans, through the Vow to Hire Heroes Act, the tax credit ranges from $2400 to $9600. If you intend to make a job offer to this applicant and would like to apply for the tax credit, please complete the attached Pre-Screening Notice and Individual Characteristics forms. They should be mailed to the address below. (Note: To obtain certification for this program, the Pre-Screening Notice must be completed on or before the start date of employment and must be mailed no later than the 28 th day after the employee begins work). If you have questions about the WOTC program please contact us: NC Department of Commerce ATTN: WOTC 4316 Mail Service Center Raleigh, North Carolina, Phone: (919) Fax: (919)