Tax Incentives for Hiring
The Tax Relief Act and Health Care Act of 2006 (P.L. 109-432) extends the Work Opportunity Tax Credit (WOTC). The WOTC, which includes the former Welfare-to-Work Tax Credit, has two purposes:
"To promote the hiring of individuals who qualify as a member of a target group", and
"To provide a federal tax credit to employers who hire these individuals."
An employer may qualify for a tax credit of up to $9,000 if the employee is a member of one of the nine designated target groups and mets that group's specific requirements:
- Qualified recipients of Temporary Assistance to Needy Families (TANF)
- Qualified veteraans who are receiving Food Stamps
- Ex-felons hired no later than one year after conviction or release from prison.
- Youth ages 18 through 24 who reside in a federally designated Empowerment Zone, Enterprise Community, or Renewal Community
- Vocational Rehabilitation referrals
- Qualified summer youth ages 16 though 17 who reside in a federally designated Empowerment Zone, Enterprise Community, or Renewal Community, and have not previously worked for the employer seeking this tax credit.
- Qualified Food Stamp recipients ages 18 through 39
- Qualified recipients of Supplemental Security Income (SSI)
- Long-term family assistance recipients
Job seekers must inform potential employers that they belong to one of these target groups so that the job seeker and employer complete the necessary forms on or before employment is offered.
The Employment Development Department is the WOTC authorizing agency for California employers. For more information and frequently asked questions regarding the WOTC, please refer to http://www.edd.ca.gov/jobs_and_training/Work_Opportunity_Tax_Credit.htm or call us at (562) 633-9511 ext. 239 for additional information. You can also message us.