Labor and Economic Opportunity
The Work Opportunity Tax Credit is a federal business credit available to private, for-profit employers who hire workers from targeted groups that experience difficulty finding work. These labor pools include veterans; ex-felons; long-term unemployment recipients; Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), or Social Security recipients; workers with physical or mental disability; or applicants who live in the Rural Renewal Counties (RRC) of Gogebic, Marquette and Ontonagon or in Detroit's Empowerment Zone.
All or part of the tax credit can be claimed in the year prior to being approved for the credit or spread out over the next 20 years.
Eligible new hires cannot have any prior work history with the employer, cannot be a relative of the employer and must be a U.S. citizen or permanent resident.
Employers must submit the proper documentation to prove that the new hire is covered by one of the target groups. Failure to submit the necessary information will delay an application.
An employer must submit to the Michigan Unemployment Insurance Agency the following two documents for each newly hired employee who may qualify as a target group member. Mail both forms together.
The IRS and ETA forms as well as the requirements for specific target group documentation can be found at the UIA website at Michigan.gov/UIA, by calling the WOTC Unit toll free at 1-800-482-2959 or the U.S. Department of Labor website.
Employee Retention Credit: Can be used in conjunction with WOTC for an added tax credit. How the refundable tax credit works:
Fidelity Bonding: Covers job seekers who are considered high-risk due to factors in their personal backgrounds and who have been rejected by a commercial bonding company. It protects employers from any loss of money or property incurred as a result of dishonesty by high-risk workers.