Additionally, see the LB&I and SB/SE Joint Directive on the Work Opportunity Tax Credit that the IRS issued to help certain employers affected by extended delays in the WOTC certification process.Ī “qualified long-term unemployment recipient” is an individual who has been unemployed for not less than 27 consecutive weeks at the time of hiring and who received unemployment compensation during some or all of the unemployment period. See the Instructions to Form 5884 and Form 5884-C for more information. Following receipt of a certification from the designated local agency that the employee is a member of one of the 10 targeted groups, taxable employers file Form 5884 (Work Opportunity Credit) and tax-exempt employers file Form 5884-C (Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans) to claim the WOTC. See the Instructions to Form 8850 and the DOL Employment and Training Administration’s website on WOTC for more information. Additional forms may be required by the DOL to obtain certification. The employer has 28 calendar days from the new employee’s start date to submit Form 8850 to the designated local agency located in the state in which the business is located (where the employee works). On or before the day that an offer of employment is made, the employer and the job applicant must complete Form 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit). See the Instructions to Form 3800 (General Business Credit) for more information.Ī4. In general, taxable employers may carry the current year’s unused WOTC back one year and then forward 20 years. An employer cannot claim the WOTC for employees who are rehired. Up to $24,000 in wages may be taken into account in determining the WOTC for certain qualified veterans. A 25% rate applies to wages for individuals who perform fewer than 400 but at least 120 hours of service for the employer. Thus, the maximum tax credit is generally $2,400.
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