Tax credits from the federal government are available to offset your company’s federal tax accountability. These credits are frequently applicable when hiring employees with distinguishing traits, or individuals residing and working in designated federal areas.
The Work Opportunity Tax Credit Program (WOTC)
WOTC is a federal tax incentive program available to employers to hire and retain individuals from specific targeted groups with barriers to employment. There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit, but restrictions are based upon hours your qualified employee works to capture the credit.
Employers can earn a tax credit of between $1,200 and $9,600 per employee, depending on the target group of the new employee and the number of hours worked in the first year.
Long Term Family Assistance Recipient (TANF), formerly known as “Welfare to Work” provides an incentive to hire long-term family assistance recipients. A qualified individual can earn your business up to $9,000. Your business does not have to be in an empowerment zone, enterprise community, or renewal community to qualify for this credit. You are eligible to claim if you pay –or incur— “qualified wages” during the first 2 years of employment to a “long-term family assistance recipient.”
Empowerment Zone Credit
The Empowerment Zone Credit provides businesses with an incentive to hire individuals who both live and work in an empowerment zone.
Employers can earn a tax credit of 20% of $15,000 ($3,000 per qualified “Zone” employee) There is no limit on the amount of employees you hire to take advantage of the Empowerment Zone Credit.
The Indian Employment Credit
The Indian employment credit provides businesses with an incentive to hire certain individuals who live on or near an Indian reservation. Your business does not have to be in an empowerment zone, enterprise community, or renewal community to qualify for this credit. You can claim the credit if you pay or incur “qualified wages” to a “qualified employee.” Employers can earn a tax credit of 20% of $20,000 ($4,000 per qualified employee). There is no limit on the amount of employees you hire to take advantage of the Empowerment Zone Credit. Other restrictions apply, call EHB for additional information.