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Work Opportunity Tax Credit Program

Work Opportunity Tax Credit Program. What is WOTC. Federal Tax Credits Encourages hiring of individuals with barriers to employment Not Sellable or Transferable Can carry forward 20 years. Eligibility. May be claimed by any private, for profit business

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Work Opportunity Tax Credit Program

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  1. Work OpportunityTax Credit Program

  2. What is WOTC • Federal Tax Credits • Encourages hiring of individuals with barriers to employment • Not Sellable or Transferable • Can carry forward 20 years

  3. Eligibility • May be claimed by any private, for profit business • Qualified “tax-exempt” (i.e., 501c) organizations can participate by hiring qualified veterans (as of November 22, 2011) • No limit on the number of new hires or total amount of credits distributed per year

  4. Eligibility • Credits cannot be claimed on: • Previous employees • Relatives • Domestic employees • Wages subsidized by Federal On-The-Job training programs

  5. Program Authorization • WOTC began on October 1, 1996 • Authorized through December 31, 2013

  6. WOTC TARGET GROUPS Thirteen target group

  7. SNAP Veteran • A veteran who is a member of a family receiving SNAP benefits for any consecutive three months during the 15 month period prior to the hire date • Copy of DD-214 or discharge papers needed for approval

  8. Unemployed Veteran (short term) • A veteran that has been unemployed for not less than four weeks during the one year period prior to the hire date. • Copy of DD-214 or discharge papers needed for approval

  9. Unemployed Veteran (long term) • A veteran that has received unemployment compensation law for at least six months within the 12-month period ending on the hire date. • Copy of DD-214 or discharge papers needed for approval.

  10. Disabled Veteran • A disabled veteran who is entitled to compensation for a service-connected disability (10% or greater) and has a hiring date that is not more than one year after having been discharged or released from active duty in the US Armed Forces. • A letter of Disability from the Dept of Veteran Affairs is needed

  11. Disabled Veteran (unemployed) • A disabled veteran who is entitled to compensation for a service-connected disability (10% or greater) and has been unemployed for not less than six months during the one year period ending on the hire date. • A letter of Disability from the Dept of Veteran Affairs is needed

  12. Qualified TANF Recipient • A member of a family that has received Temporary Assistance for Needy Families (TANF) for any nine months during the 18-month period prior to the hire date.

  13. Long-Term Family Assistance Recipient • A member of a family that received Temporary Assistance for Needy Families (TANF) benefits for at least 18 consecutive months ending on the hiring date. • A member of a family whose TANF eligibility expired after August 5, 1997 and is hired within two years after eligibility expiration.

  14. Qualified Ex-Felon • An ex-felon who was convicted or released from prison within the 12 month period prior to the hire date.

  15. Designated Community Residents • An 18 to 39 year old resident of a federally designated Empowerment Zone or resident of a Rural Renewal county

  16. Rural Renewal Counties • Atchison County • Carroll County • Chariton County • Clark County • Holt County • Knox County • Mississippi County • New Madrid County • Pemiscot County • Worth County

  17. Vocational Rehabilitation Client A disabled person who: • Has an Individual Plan for Employment (IPE) from the Division of Vocational Rehabilitation (VR) or the US Dept. of Veteran Affairs open before the date of hire. • Has a date of hire within two years of their IPE closing date. • Holds a “Ticket To Work” from the VR or the Dept of Veteran Affairs. • No proof needed unless it is through Veteran Affairs

  18. Qualified Food Stamp Recipient • An 18 to 39 year old and is a member of a family that received food stamps for the last six months prior to the hiring date.

  19. Qualified SSI Recipient • A person who received Supplemental Security Income (SSI) for any month within the last 60 day period prior to the hiring date. • Proof of SSI from the Social Security Administration needed

  20. Summer Youth • A 16 or 17 year old resident of a federally designated Empowerment Zone hired between May 1 and September 15.

  21. Business Process Five Step Process

  22. 1. Get the Forms • Two forms required: • 8850 • Postmarked within 28 days of the Start Date • Must be signed • Both pages (front and back) must be submitted • All dates must be complete • 9061 • Does not have to be postmarked within 28 days • Encourage employer to mail with the 8850 • Must be Revised version of the form dated April or July 2013

  23. Forms • Business Guide • jobs.mo.gov • www.doleta.gov • www.irs.gov • 800-877-8697

  24. 2. Screen Applicant • Screen applicant for eligibility via the Form 8850 • The Form 8850 must be completed on or before the day the job is offered. • Signatures must be original for both employer and applicant • If applicant indicates they fall into a target group, go on to step 3. If they do not the process stops.

  25. 3. Hire • Complete the Form 9061 • This form requires the target group be identified • Multiple target groups may be checked • The Form 9061 may be signed by anyone

  26. 4. Review Forms • Closely review forms - • Must be complete and legible • Ensure a target group is indicated on Form 9061 • Both forms must be signed • Verify not more than 28 days have passed since the hire date

  27. 5. Mail the Forms • Mail forms to: Division of Workforce Development Attn: WOTC PO Box 1087 Jefferson City, MO 65102-1087

  28. Tax Credit Amounts

  29. WOTC CREDITS • Tax credit amount are based on a minimum number of hours worked and a percentage of wages • 400 hour required • A minimum of 120 hours required for a partial credit • Certain target groups are worth more than others • Possible for applicants to fall into more than one group

  30. WOTC CREDITS • For 8 of the target groups : • For employees that work at least 400 hours, the credit is 25% of the first $6,000 in wages for a maximum amount of $2,400. • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $6,000 in wages for a maximum credit of $1,500.

  31. WOTC CREDITS • For the Disabled Veteran target group: • For employees that work at least 400 hours, the credit amount is 40% of the first $24,000 in wages for a maximum credit of $9,600 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $24,000 in wages for a maximum credit of $6,000 • For the Disabled Veteran (unemployed) target group: • For employees that work at least 400 hours, the credit amount is 40% of the first $12,000 in wages for a maximum credit of $4,800 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $12,000 in wages for a maximum credit of $3,000

  32. WOTC CREDITS • For the Unemployed Veteran (long term) target group: • For employees that work at least 400 hours, the credit amount is 40% of the first $14,000 in wages for a maximum credit of $5,600 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $14,000 in wages for a maximum credit of $3,500 • For the Summer Youth target group: • For employees that work at least 400 hours, the credit amount is 40% of the first $3,000 in wages for a maximum credit of $1,200 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $3,000 in wages for a maximum credit of $750

  33. WOTC Credits • For the Long Term Family Assistance Recipients: • For employees that work at least 400 hours, the credit amount is 40% of the first $10,000 in wages for a maximum credit of $4,000 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $10,000 in wages for a maximum credit of $2,500 • The second year’s credit is: • For employees that work at least 400 hours, the credit amount is 50% of the first $10,000 in wages for a maximum credit of $5,000 • For employees that work at least 120 hours, but less than 400 hours, the credit amount is 25% of the first $10,000 in wages for a maximum credit of $2,500 • The maximum credit for both years is $9,000

  34. DIVISION OF WORKFORCE DEVELOPMENT PROCESS • Review requests for timeliness, original signatures, and verify applicant eligibility on the date of hire. • Three possible outcomes: • Certification: If the applicant meets the eligibility guidelines, the employer is mailed an Employer Certification letter. • Denial: If the applicant does not meet the criteria, the employer is mailed a denial letter. • Insufficient information: If we require additional information, a request letter is mailed to the employer.

  35. Claiming the Credit • WOTC can be claimed by filing IRS Form 5884 • The current form can be found on the IRS website • Tax related questions can be directed to the IRS at: 800-829-4933

  36. QUESTIONS?

  37. Contact Information Jennifer Cheshire – State Coordinator Lisa Elrod – Section Manager Missouri Division of Workforce Development 800-877-8698 wotc@ded.mo.gov

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