Work Opportunity Tax Credits – Accounting and Finance

Employers:

Are you familiar with Work Opportunity Tax Credits?
(IRS Tax form 8850)

The Employer can reduce their taxes up to $2400 or $4800 during the first year of employment or up to $9000 over two years depending on the qualified applicant you hire.   See below the targeted groups, purpose of the program and who is responsible for completing the information.

All information below is from www.irs.gov and assistance is available at Telephone Assistance for Businesses:
Toll-Free, 1-800-829-4933
Hours of Operation: Monday – Friday, 7:00 a.m. – 10:00 p.m. your local time (Alaska & Hawaii follow Pacific Time)

Purpose of Form

Employers use Form 8850 to pre-screen and to make a written request to their state workforce agency (SWA) to certify an individual as a member of a targeted group for purposes of qualifying for the work opportunity credit.

Submitting Form 8850 to the SWA is but one step in the process of qualifying for the work opportunity credit. The state work opportunity tax credit (WOTC) coordinator for the SWA must certify the job applicant is a member of a targeted group. After starting work, the employee must meet the minimum number-of-hours-worked requirement for the work opportunity credit. The employer elects to take the credit by filing Form 5884, Work Opportunity Credit.

Who Should Complete and Sign the Form

The job applicant gives information to the employer on or before the day a job offer is made. This information is entered on Form 8850. Based on the applicant’s information, the employer determines whether or not he or she believes the applicant is a member of a targeted group (as defined under Members of Targeted Groups). If the employer believes the applicant is a member of a targeted group, the employer completes the rest of the form no later than the day the job offer is made. Both the job applicant and the employer must sign Form 8850 no later than the date for submitting the form to the SWA.

Click here to read IRS Tax Form 8850 full instructions.

Click here to download IRS Tax Form 8850.