With the unemployment rate as low as it has been in the last 50 years, employers know how difficult it is to hire qualified employees. Did you know that the IRS has a federal tax credit for hiring individuals in targeted groups? Hiring individuals from these targeted groups can fill a need and save some taxes for your business. Listen in and learn more!
What are examples of workers in the targeted groups?
These groups consist of welfare recipients such as SNAP or TANF, food stamp recipients, qualified veterans, SSI (disability) recipients, ex-offenders, designated community residents, vocational rehabilitation, summer youth and long-term unemployment recipients.
Sounds like a win-win. How does it work?
The credit is called the Work Opportunity Tax Credit. The credit is based on a number of factors such as the category of workers, how many hours per year they work, and how long they are employed. It’s nice because this is a credit – not a deduction.
How much is the credit?
For many of the categories listed above, the maximum credit is $2,400, but it could go as high as $9,600.
Is the credit only available to for-profit businesses?
No. It is also available for non-profit entities. The credit offset income tax for for-profit businesses and the payroll taxes for non-profit organizations.
What does the employer need to do in order to get the credit?
An employer must get a certification that the individual is a member of the targeted group before being able to claim the credit. The state workforce agency certification must be done early on, normally within the first 28 days of employment, so if you have a potential employee, you will want to do this quickly.
Is there an expiration date for the credit?
The credit has been extended for a number of years, but the current expiration date is Dec. 31, 2019.