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September 28 Deadline for
Work Opportunity Tax Credit
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If you are an employer who has hired long-term unemployment recipients, certain veterans, recipients of certain types of public assistance and other workers who may face barriers to employment, you may be eligible for a Work Opportunity Tax Credit (WOTC). But you'll need to request certification of the eligibility of the workers you hired (between January 1, 2015 and August 31, 2016) by Wednesday, September 28, 2016.
The WOTC has been around for several years, but expired at the end of 2014. However, the Protecting Americans from Tax Hikes (PATH) Act, enacted last December, included a provision that retroactively extended the Work Opportunity Tax Credit (WOTC) for nine categories of workers hired on or after Jan. 1, 2015. The legislation also added a tenth category for long-term unemployment recipients hired on or after Jan. 1, 2016 who had been unemployed for a period of at least 27 weeks and received state or federal unemployment benefits during part or all of that time.
The September 28, 2016 certification deadline applies to eligible workers hired between January 1, 2015 and August 31, 2016. Normally a worker must be certified within 28 days of being hired, but the IRS extended this deadline due to the late enactment of the PATH legislation. The 28-day certification period will once again apply to any workers hired after August 31, 2016.
The 10 categories of WOTC-eligible workers include:
- Qualified IV-A Temporary Assistance for Needy Families (TANF) recipients
- Unemployed veterans, including disabled veterans
- Ex-felons
- Designated community residents living in Empowerment Zones or Rural Renewal Counties
- Vocational rehabilitation referrals
- Summer youth employees living in Empowerment Zones
- Food stamp (SNAP) recipients
- Supplemental Security Income (SSI) recipients
- Long-term family assistance recipients
- Qualified long-term unemployment recipients (for people who begin work after 2015).
Eligible businesses claim the WOTC on their income tax return. Though the credit is not available to tax-exempt organizations for most categories of new hires, a special rule allows them to earn the WOTC for hiring qualified veterans.
For more information on the Work Opportunity Tax Credit, or for answers to other questions about taxes, please call the Gray, Gray & Gray Tax Department at (781) 407-0300.
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