Recently, the IRS announced that it was extending the time for employers to file for the work opportunity tax credit (WOTC) that hired eligible workers in 2014. The WOTC is a federal tax credit that reduces the federal tax liability based on wages paid to new hires for targeted groups that are employed by privately-held businesses. These businesses with qualified employees could potentially reduce their tax liability by thousands. The WOTC may be applicable to retail, quick-service or full-service restaurants, construction or other labor-intensive industries with expected turnover or seasonal labor needs, among others.
A Few Applicable WOTC Targeted Groups:
- Qualified Temporary Assistance to Needy Families Recipients (TANF)
- Qualified Veterans
- Qualified Ex-felons
- Qualified Designated Community Residents (DCR) residing in an Empowerment Zone (EZ)
- Qualified Vocational Rehabilitation Referrals
- Qualified Summer Youth (SY)
- Qualified Supplemental Nutrition Assistance Program (SNAP) Recipients
- Qualified Supplemental Security Income (SSI) Recipients
- Qualified Long-Term Family Assistance Recipients
Maximum Credit Available
The WOTC amount varies based on the wage paid to a targeted group employee and be as much as $6,000 for certain veterans.
Deadline to File
The deadline to file the Form 8850 is now April 30, 2015. Talk with your CPA about your situation to determine if this new window or “look back period” is applicable to your business and could potentially reduce your tax liability.
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