On December 18, 2015, President Obama signed the Omnibus Spending Bill H.R. 2029 and the PATH Act (Protecting Americans from Tax Hikes Act of 2015) into law, which among other provisions, provides a five-year extension to the Work Opportunity Tax Credit (WOTC) program, as well as expands its scope of eligible groups.
The WOTC is basically a tax incentive for employers to hire and retain individuals from specific target groups. The groups include certain Veterans, Temporary Assistance for Needy Families (TANF) recipients, Food Stamp recipients, Supplemental Security Income (SSI) recipients, Vocational Rehabilitation (VR) Referred Individuals, Ex-Felons, and Summer Youth employees. Effective January 1st, 2016, there is a newly added is a category for the Long-Term Unemployed.
A Long-Term Unemployed is an individual who was unemployed for greater than 26 consecutive weeks and received unemployment compensation for a period of time under state or federal law.
Hiring an individual from one of these groups can qualify your business for a tax credit of up to $9,600 per eligible employee during the first year of employment. Not bad when you consider you may be hiring someone from one of these groups and not even knowing it.
More information on the WOTC can be found on the Department of Labor’s Website, or check with your state as the WOTC eligibility is managed on the state level.