The State of Pennsylvania is taking advantage of funds from the American Recovery and Reinvestment Fund Act of 2009 to stimulate employers into hiring members of two of the most vulnerable sectors of our workforce as part of the Work Opportunity Tax Credit Program. Whether you are an employer, an employee or a self-employed worker thinking of expanding your business by employing workers this information can be of great value to you. This article will provide information on the type of business that can benefit from this tax incentive, what this tax incentive means for your business and how you can apply for it.

Which Business Types Qualify for These Credits

This is kind of a trick question, because nearly all businesses qualify for this tax credit regardless of their size, the number of workers they plan to hire and whom the business decides to hire. However, if the business hires a worker in a target demographic, such as Unemployed veterans, felons and disconnected youth, it might be able to claim twice (once for each tax credit) for the same employee.

The only exceptions are:

– Businesses already collecting financial assistance for a On-The-Job training program cannot apply for this tax credit until the program ends and regular wages are paid to the employee. The good news about this program is that it requires very little paperwork and therefore provides high returns for a small investment of time and resources.

– Not-for-profit businesses.

– Businesses employing relatives. There is another reason not to have family members as employees .

– Workers you rehire are not eligible for the federal tax credit either. The program does not want businesses to fire workers just to reemploy them under the program. The ideas is to generate new jobs by providing savings to businesses, not to create loopholes to subsidize businesses.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit program was launched by the Small Business Job Protection Act in 1996 and was extended by the Small Business and Work Opportunity Act of 2007. The American Recovery Reinvestment Act of 2009 added two extra categories to the program to target specially vulnerable sectors of the workforce. To receive the tax credit a business must fill in the IRS Form 8850 within 28 days of the new employer starting work. The business must also fill in the ETA 9061—a form providing details on the Individual’s Characteristics—and attach it to the ETA 9061 Form.

You can download the necessary forms and request more information from this link to the Pennsylvania Labor and Industry Department.

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