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Last week the IRS issued guidance regarding the expanded work opportunity tax credits (WOTC). In addition to types of new hires previously qualifying, these credits are now available for employers who hire certain unemployed veterans or "disconnected youth." Businesses with qualifying employees already on their payrolls, and those looking to hire more should know how the credit works.
Work opportunity tax credits reward employers for hiring certain disadvantaged individuals. The American Recovery and Reinvestment Act of 2009 added two groups of new-hires to this list: unemployed veterans and "disconnected youth" hired after 2008 but before 2011.
Groups which were already eligible include:
According to recently issued IRS guidance, qualifying unemployed veterans must have:
A qualifying "disconnected youth":
The amount of work opportunity tax credit available depends on wages paid and the group under which the employee qualifies. For unemployed veterans and disconnected youth, the credit per employee will max out at $2400.
Employers must file Form 8850 with their state's workforce agency to confirm the status of eligible employees. Normally, they must do so within 28 days of the hire date. If unemployed veterans or disconnected youth were hired between January 1, 2009 and June 17, 2009, however, employers have until August 17, 2009 to file Form 8850.