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 GOAL IS                                                  SMOOTH  

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Is your small business booming. Strategy Hire workers from certain disadvantaged target groups. then you can qualify for thte Work Opportunity Credit which can provide thousands of dollars in tax savings for you company. The WOTC which had expired at the end of 2014, was recently reinstated retroactive to 2015 by the Protecting American from Tax Hikes Act and extended through 2019. The Path Act also adds another targeted group mof workers eligible for the credit. The WOTC is base on the number of hours worked and wages earned in the first year of employment. I f the employee works at least 120 hours, the credit is generally equal to 25% of the first year wages up to $6,000 for a maximum credit of $1,500. If the employee works at least 400 hours, the credit is boosted to 40% of first year wages up to $6,000 for a maximum ctedit of $2,400. 


Prior to the Path Act the target groups for the WOTC included the following

  • Military Veterens
  • Temporaty Assistance for needy family recipients
  • Food Stamp Receipts
  • Designated Community Residents, living in emporwerment zones or rural  renewal counties
  • Exfelons
  • Supplemental Security Income recipients
  • Summer Youth Employees


Thanks to the PATH Act your business can now claim WOTC for workers hired last year. The IRS has issued new transitional rules governing both past hires and new hires.

  1. ​An Employer that has hired orhires a member of a target group who began or begins work after  Dec 31, 2014 and before June 31,2016 will be considered to have satisfied the requirement if the employer submits the completed Form 8850 no later tahn June 29,2016.
  2. An employer that has hired or hires an individual who is a long term unemployment receiptent and began or begins work after Dec 31,2015 and before May 31,2016 will be considered to have satisfied the requirements


Special rules may apply to some ot these groups. For instance, the credit available for the TANF group is available over a two year period. Enen bigger credit may be available for hiring military veterans. The maximum credit can reach as high as $9,600 for a disabled veteran.  Thanks to the PATH Act the WOTC is now also available for hiring long term unemployment recipients as individuals unemployed for not less than 27 weeks who have received unemployment compensation under federal or state law. The WOTC can be claimed for qualified employees from this group who begin work after 2015. An employer is required to obtain certification that an individual is a member of the targeted  group before it can claim the WOTC by filing Form 8850, the form must be filed within 28 days after the eligible worker begins work  unless transitional rules apply Best of all there is no overall dollar limit on the WOTC amount that can be claimed  by an employer  The WOTC which is claimed as part of the general business ctedit reduces yhour business tax bill on a dollar for dollar basis

​TAX STRATEGIES

WORK OPPORTUNITY CREDIT

               DANIEL CULLINANE CPA                                                              Phone:          732-516-1648

                           Certified Public Accountants                                                                                        FAX               732-516-9778

                               328 Amboy Ave, Metuchen NJ   08840                                                              

                                                                                                                                     


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