Service Businesses | Healthcare | Nonprofit | Manufacturing & Distribution | Government Contractors | Construction & Real Estate
Published on October 07, 2021
Service Businesses | Healthcare | Nonprofit | Manufacturing & Distribution | Government Contractors | Construction & Real Estate
The Work Opportunity Tax Credit is a long-standing tax benefit that encourages employers to hire employees from ten targeted groups facing barriers to employment.
These ten groups include:
Employers must request certification for the tax credit by submitting Form 8850 to their state workforce agency within 28 days of the employee starting work at the business.
A special relief provision currently gives employers until November 8, 2021 to submit the form to their state workforce agency when hiring (or having hired) employees that fall into one of two groups: qualified summer youth employees living in empowerment zones and designated community residents living in empowerment zones. To qualify, employees must have started work after January 1, 2021 and need to start before October 9, 2021.
Though this is a federal form, employers shouldn’t submit Form 8850 to the IRS.
The credit amount is calculated based on wages paid to eligible workers during the first year of employment. Use Form 5884 to calculate the credit amount, and use Form 3800 to claim the credit as part of your business’s federal income tax return.
Qualified nonprofits can claim the work opportunity credit for qualified first-year wages paid to qualified veterans by using Form 5884-C. This credit is claimed against payroll taxes and is limited to the amount of business income tax liability or Social Security tax owed.
The following empowerment zones are in effect until December 31, 2025.
Parts of the following rural areas are designated empowerment zones.
Contact us here or call 800.899.4623.
Published on October 07, 2021