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WORKFORCE
DEVELOPMENT
RESOURCE
CENTER |
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THE WORK OPPORTUNITY TAX CREDIT (WOTC) PROGRAM AND WELFARE-TO-WORK TAX CREDIT |
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EMPLOYERS MAKE THE HIRING DECISION |
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There is no limit to the number of new hires who can qualify an employer for the tax savings. |
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Minimal paperwork is needed to claim the tax credits |
| Listed below are the number of WOTC/WtW
certifications in Ohio over the last three years:
1999: 10,780 2000: 28,806 2001: 26,263 On March 9, 2002, President Bush signed into law the Job Creation and Work Assistance Act of 2002. This act reauthorizes the WOTC program and the WtW Tax Credit for 27-mounth period beginning January1, 2002 and ending on December 31, 2003. Under The Welfare to Work Tax Credit for Hiring long-term welfare recipients, employers can claim up to $8,500 of combined tax savings per new hire: 35 percent of qualified wages for the first year of employment and 50 percent of qualified wages for the second year of employment. Qualified wages with include tax exempt amounts received under accident and health plans as well as educational and dependent assistance programs-are capped at $10,000 per year. To qualify employers for this tax credit, new hires must be employed at least 400 hours or 180 days. |
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THE WORK OPPORTUNITY TAX CREDIT: |
| The Work Opportunity Tax Credit for hiring all WOTC target groups, except for summer Youth, can range up to $2,400 for each new hire: 40 percent of qualified first-year wages for those employed 400 or more hours; 25 percent for those employed at least 120 hours. Qualified wages are capped at $6,000. Summer Youth wages are capped at $3,000. To qualify employers for the WOTC, new hires must begin work on or after July1, 1999 and before December 31, 2003. |
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COORDINATION OF WOTC & WtW: |
| Participating employers have a maximum combined period of two years to claim either credit. The WOTC and Welfare-to-Work Tax Credits cannot both be claimed for the same individual in the same taxable year. |
| HIRE FOR AMONG THESE NINE GROUPS OF JOB SEEKERS |
| TANF-member of a family that received
Temporary Assistance for Needy Families (TANF) for a total of at least
nine of the 18 months ending on the hire date. -eligible for WOTC
LONG-TERM WELFARE RECIPIENT- member of a family that received Temporary Assistance for Needy Families (TANF) for at least 18 consecutive months ending on the hire date or whose family received TANF for at least 18 months after August 5, 1997- or whose TANF eligibility expired under a federal or state law after August 5, 1997 - eligible for the WtW tax credit. 18-24 YEAR OLD FOOD STAMP RECIPIENT - member of a family that received food stamps for at least the last six months ending on the hire date or for at least three of the five months before date of hire in the case of family whose ceases to be eligible for such public assistance -WOTC VETERAN - veteran and member of a family that received food stamps for at least a three-month consecutive period during the 15 months ending on the hire date - WOTC. 18-24 year old EZ/EC/RC resident- resides in one of the 145 federally designated Empowerment Zones, Enterprise Communities or Renewal Communities (EZ/EC/RCs)*. The EZ/EC/RC areas are in Ohio are Akron, Cleveland, Cincinnati, Columbus, the Ironton area, and the Portsmouth area. - WOTC 16 - 17 year old EZ/EC/RC resident - hired as a Summer Youth Employee (employed between May 1 and September 15). - WOTC. Vocational Rehabilitation referral - a disabled person who completed or is completing rehabilitative services approved by state or the U.S. Department of Veteran Affairs. - WOTC. Ex-felon - ex-felon and member of low-income family - WOTC SSI recipient - received Supplemental Security Income benefits for any month within the 60 day period ending on the hire date - WOTC * For information about EZ/EC/RC's, visit the EZ/EC/RC website: Egis Locator or call 1-800-998-9999. The website of the Lower living Standard is |
| Certification Takes Three Simple Steps |
| Employers must apply for and receive
certification from ODJFS that their new hire is a long-term welfare
recipient or member of one of the WOTC target groups before they can claim
the Work Opportunity or Welfare-to-Work credits on their federal tax
return. To apply for certification, employers must:
1. Complete the IRS Form 8850, "Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Tax Credits," by the date of the job offer. 2. Complete the U.S. Department of Labor ETA Form 9061, "Individual Characteristics Form," and submit the required supporting documentation for the target group requested, as defined on the back of the ETA 9061 3. Mail the signed and dated IRS and ETA form no later than 21 days after the new hire's employment start date to: The Ohio Department of Job & Family Services Bureau of Tax Credit Services -WOTC/WtW Unit 145 S. front St., 2nd Fl., POB 1618 Columbus, Ohio 53215-4156 To get the IRS Form 8850 Work Opportunity and Welfare-to-Work Tax Credit Pre-Screening notice and Certification Request, along with instructions, please visit our website at: www.irs.ustreas.gov/ To get the ETA form 9061, the WOTC Individual Characteristics Form, a brochure and directories of the state and regional coordinators, call the FAX-ON-DEMAND NUMBER AT 1-877-828-2050. To access this free service, you may call from a fax machine or your touch tone phone. You can also get these forms and materials by visiting: www.ows.doleta.gov/employ/tax.asp. |
| WHO DOESN'T QUALIFY |
| No tax credit can be claimed for wages paid to relatives.
Not tax credit can be claimed for federally subsidized on-the-job-training. However, wages paid after the subsidy expires can qualify for the credits. Any individual who previously worked for the employer and does not meet the definition of "qualifying re-hire." |