We can assist you with:   • The Work Opportunity Credit   • EZ/RC Credits

The Work Opportunity Credit

The Work Opportunity Credit (WOTC) is known as a "point of hire" credit. That is, the act of hiring a qualified individual actually generates the credit. The rate of the credit can range from 25%-50% and the base on which is paid can range from $1,000 to $20,000.

Covered Employees and Maximum Benefits are as follows:

Maximum $2,400 in Credits

• Welfare Recipients (AFDC/TANF)
• Veterans receiving food stamps
• Former Felons
• Youth 18-40 who are food stamp recipients
• Designated Community Residents (Youth 18-40 living in designated zones)
• Summer Youth Hires
• Vocational Rehabilitation Referrals
• Individuals on Supplemental Security Income

Maximum $4,800 in Credits

• Disabled Veterans

Maximum $9,000 in Credits

• Long-Term Family Assistance Recipient

Example One:

New Hire Jane is a qualifying individual. She was paid $12,000 in the first year she was hired.	$12,000
The WOTC is limited to the first $6,000 paid	$ 6,000
Rate of Credit	40%
CREDIT EARNED	$ 2,400

The credit is in effect a reimbursement of up to $2,400 of wages. No credit is awarded unless the employee works at least 120 hours. Between 120 and 400 hours, the credit is 25% of wages paid. Once 400 hours are worked, all 'qualified' wages paid will earn the full benefit of 40%.

Example Two:

New Hire John is an individual qualifying as a disabled veteran. He was paid $12,000 in the first year he was hired.	$12,000
The WOTC is limited to the first $12,000 paid	$12,000
Rate of Credit	40%
CREDIT EARNED	$ 4,800

Example Three:

New Hire James is an individual qualifying as a Long Term Family Assistance Recipient. He was paid $18,000 during his first year of employment, and $20,000 during his second year.
First year credit base limited to:	$10,000
Rate of Credit	40%
Credit Earned on First Year Wages	$4,000
Second year credit base limited to:	$10,000
Rate of Credit	50%
Credit Earned on Second Year Wages	$5,000
Total Credit Earned	$9,000

Empowerment Zone (EZ) and Renewal Community (RC) Credits
Federal laws have established Empowerment Zones and Renewal Communities which are designed to encourage businesses to locate in these (normally depressed) areas through the offering of special tax incentives for locating operations and hiring local residents.

The EZ and RC credits provide businesses with an incentive to hire individuals who both live and work in a qualifying zone. Under current provisions, a business can earn up to $3,000 per year for individuals qualifying for the EZ credit and up to $1,500 for individuals qualifying for the RC credit. The fact that these credits can be earned year after year on the same individuals make this the most significant of credits. However, each of these zones is designated as qualifying for a limited period of time, usually 8 – 10 years. Accordingly, should you ever find yourself in or near such a zone you should plan to take full advantage of the designation for as long as you can. Should you generate more credits than you can currently use, they can carry forward into future tax returns for up to 20 years. Zones are designated based on the poverty levels of the residents. Even though you may not have operations in a Zone, you may still hire individuals who live in a Zone. In our experience, many such employees will qualify for the WOTC.

For more information on receiving the credits you are due, Contact Global Enterprises, LLC.