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Work Opportunity Tax Credit (WOTC)

Work Opportunity Tax Credit (WOTC). Everything you ever wanted to know about WOTC…. . Don’t want to know everything? Here are the basics…. The Legislative Background.

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Work Opportunity Tax Credit (WOTC)

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  1. Work Opportunity Tax Credit(WOTC)

  2. Everything you ever wanted to know about WOTC….

  3. Don’t want to know everything? Here are the basics…

  4. The Legislative Background The Work Opportunity Tax Credit (WOTC) Program was created by the Small Business Job Protection Act of 1996. It’s a federal tax credit incentive created to: • Encourage private sector employers to create jobs • and training opportunities for disadvantaged individuals • from 12 target groupsthat encounter significant barriers to employment.

  5. Here are the 12 groups:1. Long term Temporary Assistance for Needy Families (TANF) recipients 2. Other TANF recipients 3. Veterans 4. 18-39 year old Food Stamp recipients 5. 18-39 year old Designated Community Residents 6. 16-17 year old summer youth

  6. 7. Vocational Rehab Referrals 8. Ex-felons 9. SSI Recipients 10. Hurricane Katrina Employee (the IRS handles this group) 11. Unemployed Veterans 12. Disconnected Youth

  7. The Consolidated WOTC Program… • WOTC focuses on: basic entry-level skills training, • long-term employment, and retention. Who Qualifies for the WOTC Program? Newly hired employees who have not worked for the employer in the past. Who Does Not Qualify for WOTC?  Relatives, dependants of the employer The majority owner of the business The WOTC Program is available for targeted groups of job seekers who first start work on or before Aug. 31, 2011

  8. Tax Credit Benefits… • Claiming the WOTC is subject to • an employer meeting the • “Minimum Employment or Retention Period” • as follows: • TIER 1: WOTC is equal to 25% of “qualified” first (1st) -year’s wages if the “new hire” worked at least 120 hours. • TIER 2: • WOTC is equal to 40%, “qualified” 1st -year. wages, • if the “new hire” worked at least 400 hours or more.

  9. How Do Employers Apply for WOTC? There are two forms employers must complete for each new hire: • IRS Form 8850:“Pre-Screening Notice and Certification Request”This Must be submitted with ORIGINAL employer and employee signatures and dates(no exceptions). • ETA Form 9061 – “Individual Characteristics Form” • Both forms, and full instructions are on the VEC web page: http://www.vec.virginia.gov/vecportal/employer/pdf/aboutwotc.pdf

  10. What Does Timely Filing Mean? To be considered timely, the IRS Form 8850, and the ETA 9061must be submitted to the VEC not later than the 28thcalendar day* following the new employee’s ‘employment-start date.’ * Note:When the last day of the 28 calendar day period ends on a Saturday, Sunday or holiday, the next succeeding business day will be treatedas the last day of the period (the 28th day).

  11. QUESTIONS? Log on to VaEmploy.Com Click on the ‘Employer’ page, Click the ‘WOTC’ link, or contact The WOTC Unit 804-786-2887

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