On December 18, 2015, President Obama signed legislation extending the Work Opportunity Tax Credit (WOTC) for an additional five years. The extension, packaged with the Protecting Americans from Tax Hikes (PATH) Act, now gives employers until December 31, 2019 to take advantage of WOTC.
The WOTC offers a federal tax credit to employers that hire individuals from target groups that have historically faced employment barriers. Eligible new hires include disabled veterans, ex-felons, and food stamp recipients.
Effective December 31, 2015, the newly signed bill also adds the long-term unemployed as eligible recipients. The IRS defines the long term unemployment as a period of at least 27 consecutive weeks in which the individual has also received State or Federal unemployment compensation.
Participating employers qualify for a credit ranging from $1,200 to $9,600 per hire, depending on what target group they belong to. To take advantage of the credit, employers should file the Form 8850 and Form ETA 9061 with their local state workforce agency no later than 28 days after the new hire’s start date. For additional details on WOTC tax credit amounts, see the United States Department of Labor’s site.