Work Opportunity Tax Credit Deadline Extended
The Work Opportunity Tax Credit (WOTC) is a federal tax credit that incentivizes private sector employers to hire employees from certain target groups. The credit is against income tax on a percentage of the employee’s first year wages. The credit is 25% of the employee’s first year federal wages for employees who work between 120 and 400 hours in their first year, and 40% of first year wages for employees who have worked over 400 hours in their first year. Note: The maximum credit is $6,000 times 40%.
Normally, the paperwork to receive the WOTC is due 28 days after the employee is hired, but the IRS recently issued Notice 2016-40, giving employers until September 28, 2016 to file the forms for eligible employees who started working between January 1, 2015 and August 31, 2016. This allows employers who have missed the 28 day deadline extra time to file the return and receive the credit which will reduce their federal income tax.
- Qualified veterans
- Qualified ex-felons
- Qualified summer youth employees
- Qualified members of
- Temporary Assistance for Needy Families (TANF)
- Supplemental Nutritional Assistance Program (SNAP)
- Qualified Supplemental Security Income recipients
- Long Term familiy assistance recipients
- Long Term unemployed individuals (2016 only)
If you have hired someone who is in one of these groups, be sure to file the paperwork by the due date of September 28, 2016 to receive the credit!
Please give us a call with any questions and we will be happy to assist you.