UIA - Work Opportunity Tax Credit Program


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Work Opportunity Tax Credit Program

The Work Opportunity Tax Credit (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. Work Opportunity allows maximum credits for the first year of employment of $4,800 for the disabled veteran target group, $4,000 for a long-term TANF (temporary assistance for needy families) recipient, $1,200 for summer youth and $2,400 for all other target groups. Work Opportunity also allows an additional credit of $5,000 for a long-term TANF recipient employed for a second year.

New hires qualifying as a member of at least one of the Work Opportunity target groups, must also work at least 120 hours to claim a 25% credit and at least 400 hours 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, $3,000 for summer youth 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 50% credit on the first $10,000 in gross wages paid in the second year of employment. Hiring one long-term TANF recipient, and keeping that individual employed for two years, the employer could realize 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 receiving temporary assistance for needy families (TANF) for 18 consecutive months that ends on the hire date or any 18 months after August 5, 1997 and the earliest 18-month period beginning after August 5, 1997, ended within the last 2 years or TANF benefits were exhausted due to a state or federal limit and the hire date is not more than 2 years from such ineligibility.
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) or (b) below:

(a) Veteran SNAP (food stamp) recipient : Must be a member of a family receiving assistance under the Supplemental Nutrition Assistance Program (SNAP) (food stamp) 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 was unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date.

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 stamp) 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 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 resident, ages 18 to 39: Must be 18 to 39 on or before the hire date and living in Detroit's Empowerment Zone (EZ) or Renewal Community (RC); Flint's Renewal Community; or the Rural Renewal Counties (RRC) of Gogebic, Marquette and Ontonagon at the time of hire and remains living there during the time the employer is claiming the credit for the qualified wages paid.
Summer youth, age 16-17: Must be 16 or 17 on or before May 1 and perform services from May 1 to September 15, while living in an EZ/RC community for the qualified wages paid.
Unemployed Veteran : A veteran beginning work after 2008 and before 2011 who has been discharged or released from active duty in the U.S. Armed Forces at any time during the 5-year period ending on the hiring date, and received unemployment compensation under state or federal law for at least 4 weeks during the 1-year period ending on the hiring date.

To be considered a veteran, the applicant must have served on active duty (not including training) in the Armed Forces of the United States for more than 180 days or have been discharged or released from active duty for a service-connected disability

Disconnected Youth, age 16 to 24 : A youth beginning work after 2008 and before 2011, who is age 16 to 24 on or before the hire date. In addition, the disconnected youth must attest to the criteria set forth in (a), (b) and (c) below:

(a)     During the past 6 months, has not attended or has not regularly attended any secondary, technical, or post-secondary school for more than an average of 10 hours per week, not counting periods during which the school was closed for scheduled vacation;

(b)     During each consecutive 3-month period within the past 6 months, was not employed or was employed and earned an amount less than he or she would have earned working for the applicable minimum wage 30 hours every week during the 3-month period; and

(c)     Does not have a certificate of graduation from a secondary school or a General Education Development (GED) certificate or has a certificate that was awarded at least 6 months ago and he or she has not held a job (other than occasionally) or been admitted to a technical or post-secondary school since receiving the certificate.

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
WOTC Unit
P.O. Box 8067
Royal Oak, MI 48068-8067

For only the new target groups, Unemployed Veteran and Disconnected Youth hired after December 31, 2008, and before September 17, 2009, employers are allowed additional time to mail IRS Form 8850 to the WOTC Unit. Postmarks no later than October 17, 2009, will be accepted as timely.
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.

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