Work Opportunity Tax Credit ProgramATTN: For an employer to qualify for the Work Opportunity Tax Credit (WOTC), the employer's new hires must have begun work before January 1, 2015.
The VOW to Hire Heroes Act of 2011 only affected the Qualified Veteran target group. To be eligible under the current WOTC program, a veteran must have begun work with an employer on or after November 22, 2011 and before January 1, 2015.
The WOTC is available to private-for-profit employers who hire from specific targeted groups of people that have in the past experienced difficulty in securing employment. The WOTC allows a maximum credit for the first year of employment of $9,600 for the disabled and unemployed veteran target group, $4,000 for a long-term TANF (temporary assistance for needy families) recipient, and $2,400 for all other target groups. WOTC also allows an additional credit of $5,000 for a long-term TANF recipient employed for a second year.
Qualified "tax-exempt" organizations are eligible to claim the WOTC for a credit of up to $6,240 if their new hire meets the criteria for the Qualified Veteran target group.
A new hire qualifying as a member of at least one of the Work Opportunity target groups must also work at least 120 hours for the employer to claim a 25% credit and at least 400 hours for the employer to claim a 40% credit on the first gross wages paid in the first year of employment.
- The maximum first gross wages paid in the first year of employment are $12,000 for the disabled veteran, $10,000 for a long-term family assistance recipient, and $6,000 for all remaining Work Opportunity target groups.
- For hiring a long-term TANF recipient and keeping the individual employed into a second year, the employer can claim a 50% credit on the first $10,000 in gross wages paid in the second year of employment. For hiring one long-term TANF recipient and keeping that individual employed for two years, the employer could receive a Work Opportunity Tax Credit of $9,000!
MICHIGAN TARGET GROUPS
- Short-term TANF recipient: Must be a member of a family receiving temporary assistance for needy families (TANF) for any 9 months during the 18-month period that ends on the hire date.
- Long-term TANF recipient: Must be a member of a family who received TANF for at least 18 consecutive months ending on the hire date; or has received TANF for a total of at least 18 months, whether or not consecutive, between August 5, 1997 and the hire date and at least one payment is within two years of hire; or whose TANF eligibility expired under a federal or state law after August 5, 1997, and was hired within two years after their eligibility expired.
- Qualified veteran: To be considered a veteran, the applicant must have served on active duty for more than 180 days or have a service-connected disability, and not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hire date. In addition, the qualified veteran must meet the criteria set forth in (a), (b), (c), (d), or (e), below:
(a) Veteran SNAP (food stamp) recipient: Must be a member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamps) for at least a 3-month period during the 15-month period ending on the hire date; OR
(b) Disabled veteran: Must be entitled to compensation for a service-connected disability and is hired not more than 1 year after discharge or release from active duty in the U.S. Armed Forces; OR
(c) Disabled and unemployed veteran: Must be entitled to compensation for a service-connected disability and has received unemployment compensation for aggregate periods totaling at least 6 months during the 12 months prior to hire; OR
(d) Unemployed veteran: Must have received aggregated periods of unemployment compensation totaling at least 4 weeks, but less than 6 months, during the 12 months prior to hire; OR
(e) Unemployed veteran: Must have received aggregate periods of unemployment compensation totaling 6 months or more in the 12 months prior to hire.
- Food stamp recipient, age 18 to 39: Must be 18 to 39 on or before the hire date and a member of a family that has received SNAP (food stamps) benefits for the 6-month period that ends on the hire date.
- Vocational rehabilitation work plan participant: Physically or mentally disabled person who is either currently on, or has completed a work plan with completion being within 2-years prior to the hire date. Referrals are either from a state agency, the Department of Veterans Affairs, or an employment network under the Ticket-to-Work program.
- SSI recipient: Must be on supplemental security income (SSI) for any month ending during the 60-day period ending on the hiring date.
- Ex-felon: Must have a felony conviction or release date that is not more than 1 year prior to the hire date.
- Designated Community Residents: Must be ages 18 to 39 on or before hire and live in the Rural Renewal Counties (RRC) of Gogebic, Marquette and Ontonagon, or Detroit's Empowerment Zone.
APPLYING FOR THE WORK OPPORTUNITY TAX CREDIT IS EASY
- To apply for the Work Opportunity Tax Credit, please complete the two forms available on-line: IRS Form 8850 and ETA Form 9061. Mail the completed and signed original forms postmarked by the U.S. Post Office, no later than 28 days from the employee's start date to:
Unemployment Insurance Agency
P.O. Box 8067
Royal Oak, MI 48068-8067
- We verify the target group membership and will mail either a rejection notice, or a certification notice that will list the qualifying target group for your new hire.
ON-LINE BOOKLET, BROCHURE, FACT SHEET AND FORMS
Note: The booklet is being revised and will be available shortly.
Want More Information On The Tax Credit?
Call the UIA's toll-free
WOTC Unit's hot line at 1-800-482-2959
or 313-456-2105 if out of state …
… Or e-mail us about the tax credits at WOTCUnit@michigan.gov.