Did you know that your business may be eligible for a federal hire tax credit simply by hiring certain qualified employees? These credits are available under the Work Opportunity Tax Credit (WOTC) program, with the goal to promote the hiring of individuals who face barriers to employment. This program, set to expire at the end of 2020, has been extended by Congress to run until the end of 2025.
To qualify for the credit, new hires must fall into one of the following target groups:
- Veteran – service-connected disability, unemployed 6 months
- Veteran – unemployed 6 months
- Veteran – service-connected disability, hired within 1 year of discharge
- Veteran – unemployed 4 weeks
- Veteran – SNAP benefit recipient
- LT Family Assistance – received TANF benefits for 18 months
- TANF (welfare) Recipient
- SNAP (food stamps) Recipient
- SSI Recipient
- Vocational Rehab Referral
- Designated Community Resident
- Ex-felon
- LT Unemployed – unemployed for at least 27 consecutive weeks & received gov’t benefits
- Summer Youth
The total amount of credit is dependent upon the number of hours the employees work, their total wages paid in the year of hire, and the target group they are a part of. The credit could be between $750 to $9,600 per employee, with no limit on the number of new hires that are eligible or the total tax credit dollars a business can be entitled to.
Note: the program involves providing documentation to the MN DEED office. Paperwork must be submitted within 28 days of hiring for credits to be claimed.