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Tax Incentives for Hiring

 

WORK OPPORTUNITY TAX CREDIT? (WOTC)

The Work Opportunity Tax Credit (WOTC) is a Federal Income Tax Credit that encourages employers to hire targeted groups of job seekers.  The WOTC is one tool designed to help move people from welfare into gainful employment and obtain on-the-job experience.

The consolidated WOTC for hiring members can be as much as:

    • $2,400 generally for each new adult hire,
    • $1,200 for each summer youth hire,
    • $4,800 for each new disabled veteran hire, and
    • $9,000 for each new long-term TANF recipient hired over a 2-yr. period.

The best way to find someone a job in the community is to start with a job in the community. ~ Roy

WHY USE WOTC?

Employers who hire participants from the 2 Succeed program may be able to receive the Work Opportunity Tax Credit (WOTC) for the people they hire based on a percentage of the individuals first year income. For employees working more than 120 hours in their first year, but less than 400, the tax credit is 25% of first year salary. For those working 400 or more hours, the credit is 40% of first year salary. Tax benefits are capped at $6000.

Employers can apply for certification for EVERY INDIVIDUAL they hire. So if you hire 4 individuals who qualify for the WOTC, you may be eligible to receive the tax benefits 4 times in that first year. There is no limit to how many individuals can be WOTC certified.

Employees qualify for the WOTC under the categories listed below:

  • Welfare Recipients
  • Food Stamp Recipients
  • Disabled Veterans
  • Ex Felons
  • SSI Recipients
  • TANF Recipients

HOW CAN EMPLOYERS PARTICIPATE IN THE WOTC?

Employers must apply for and receive certification from the Colorado Department of Labor & Employment WOTC Unit, verifying that their new hire is a member of a WOTC target group before they can claim the WOTC on their federal tax return. To apply for WOTC certification, employers need only:

  1. Complete the IRS Form 8850,”Pre-Screening Notice and Certification Request” for the Work Opportunity Tax Credit and complete the one-page U.S. Department of Labor ETA Form 9061, “Individual Characteristics Form”.

  2. Mail the signed IRS 8850 and ETA 9061 forms to the Colorado Department of Labor & Employment WOTC Unit. The IRS forms with original signatures must be mailed within 28 days of the new hire's start date. This proof must include a post mark from the U.S. Postal Service falling not later than the 28th calendar day following the individual's start date.

FOR MORE INFORMATION ABOUT THE WOTC:

Colorado Department of Labor & Employment
WOTC Unit 633 17th Street, Suite 700
Denver, CO 80202-3660

Fidelity bonds for commercial bonding AT NO COST to the Employer to acquire skilled workers or to the Employee to overcome employment barriers.

What Is It?

The Federal Bonding Program is designed to help secure a job for individuals whose questionable background is an obstacle in gaining employment.

Created in 1966, it is a partnership between the US Department of Labor and The McLaughlin Company which provides individual fidelity bonds for 6 months for applicants who are (or may be) denied coverage by commercial carriers because of:

  • Record of arrest, conviction or imprisonment
  • History of alcohol or drug abuse
  • Poor credit history
  • Lack of an employment history (e.g. youth, displaced homemaker)
  • Dishonorable Discharge
  • Special situations requiring fidelity bond
  • Many people do qualify for bonding

What Is A Fidelity Bond?

A fidelity bond is insurance coverage that protects an employer from employee theft.  This insurance is called “dishonesty bonding.”

The bond:

How Do I Apply?

The job applicant or prospective employer must contact a local Workforce Center or the State Bonding Coordinator. Workforce Center locations can be found at: www.coworkforce.com. Staff then applies for fidelity bonding insurance.

How Long is Coverage?

The bond may cover any period up to 6 months and is self-terminating. For anyone who successfully completes 6 months on the job, McLaughlin will accept or make arrangements for continued coverage at reduced rates, if the bond still remains a condition of employment. For Additional Information call 303-318-8828 or visit: http://www.coworkforce.com/emp/federal_bonding_program.asp

* Legal Disclaimer- The information contained in this Web site is for general guidance on matters of interest only. The information on this site is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. Before making any decision or taking any action, you should consult a PricewaterhouseCoopers professional.