Tax Credit Available for Van Wert and
Paulding Employers
Arend,
Laukhuf & Stoller, Inc.
Work
Congress
now has a tax credit available especially for Van Wert and Paulding county
employers. This credit is called the Work
How you can benefit from this tax credit?
All
businesses who hire a resident of Van Wert or Paulding counties may now qualify
for a $2,400 credit for the first $6,000 in wages paid to a newly hired
employee.
What Is Required?
1. Employee’s residence – the
employee’s principle place of residence must be a rural renewal county (both
Van Wert and Paulding qualify).
2. Employee’s age – must be between
the ages of 18 and 39 as of the date he or she is hired.
3. Certification
Requirements – you must meet one of two requirements:
1.
On or before the
day an individual begins work, the employer has received a certification from
state employment agency that the employee is a resident of the rural renewal
county.
2.
On or before the
day an individual is offered employment with the employer, a pre-screening
notice is completed by the employer with respect to such individual, and not
later than the 28th day after the individual begins work for the
employer, the employer submits such notice, signed by the employer and the
individual under penalties of perjury, to the designated state agency as part
of a written request for certification.
a.
IRS Form 8850,
Pre-Screening Notice and Certification Request for Work Opportunity Credit may
be used for this purpose.
b.
ETA Form 9061
from the Department of Labor is required by the Department of Job and Family
Services for
Other Qualifications:
1.
No credit is
allowed on employees who work less than 120 hours in the first year of
employment.
2.
No credit is
allowed for wages paid to a relative or dependent of the taxpayer.
3.
No credit is
allowed for wages paid to an individual who is more than 50% owner of the
entity.
4.
The credit is generally
not allowed for wages paid to an employee previously employed by the employer.
How is the credit calculated?
1.
Multiply 40%
times the first $6,000 in wages paid to the new employee who is certified as a
rural renewal county resident and between the ages of 18 and 39 (40% x $6,000 =
$2,400).
2.
Add the credit
amounts from all employees that qualify together.
a.
If you have 5
employees that qualify at the maximum $2,400 than you would receive a credit of
$12,000 on your tax return.
3.
No deduction is
allowed for the portion of wages equal to the amount of the credit taken for
the tax year.
4.
The credit is
subject to the overall limitations on the amount of business credits that can
be taken in any tax year, but a 1-year carryback and
20-year carryforward of unused business credits is
allowed.
a.
An employer can
elect to not have the credit apply.
Dot Your “i’s” and Cross Your “t’s” – Paperwork Matters!
This credit is a substantial
tax benefit that is often missed by employers because it takes paperwork and
time to qualify for the certification.
Recommendation:
Please
be sure to give the IRS form 8850 and ETA Form 9061 to the employee the day you
offer employment. These forms must
be signed on the same day the job offer is made. If the forms are merged into your standard
screening or new hire process you will ensure you do not miss future tax credit
opportunities. Instruct your human
resource department to follow the certification process as outlined above and
you will be on your way to receiving a windfall of tax savings.
Conclusion:
Take
advantage of this unique opportunity to reap tax credit benefits for your
business. This window of opportunity
will only be open until September 1, 2011.
The government put this policy in place to help business located in rural
renewal counties and so we encourage you to take advantage of this credit to
reduce your tax bill, benefiting you and your business.
Take Action:
Visit
the following website of the Ohio Department of Job and Family Services to get
specific instructions on how to participate in this program:
http://jfs.ohio.gov/wotc/Participate.stm
