Attention Employers! Last Chance for Work Opportunity Tax Credit ...
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Attention Employers! Last Chance for Work Opportunity Tax Credit …

work opportunity tax creditAs a small business owner, you want to take advantage of any and all tax credit opportunities!

Do you qualify for this tax credit?

Employers can take advantage of a tax credit when they hire a qualified veteran. It is called the Work Opportunity Tax Credit (WOTC), and it was extended to apply to qualified employees starting work by December 31, 2013.

See IRS Notice 2012-13 for a 16-page explanation of the tax credit and guidance on submission of the required paperwork. Here is a short list of steps to get you started …

Step 1: Get Certification

First, the IRS needs you to confirm that your employee qualifies you to take this tax credit. Of course, that means a form needs to be completed. In this case it is IRS Form 8850.

  • The employee completes the first part of Form 8850 which lists all the possible situations that could qualify your employee for certification.
  • You fill out the second page of the form with the employee’s dates of job offer, start date, etc.
  • Send the Form 8850 to your state’s Designated Local Agency (DLAs) for processing, and they will send you the certification if everything checks out.
  • Have questions? Contact your state’s workforce agency.

Step 2: Compute Your Tax Credit!

Yup. You’ll need another IRS form: Form 5884.

  • After you receive the qualified employee’s certification from your state, you will complete Form 5884 and attach it to your tax return.
  • Form 5884 will help you determine the amount of your tax credit.
  • Tax-exempt employers will use Form 5884-C instead of Form 5884.

Step 3: Claim the WOTC

  • The WOTC amount you computed using Form 5884 will be claimed as a general business credit on Form 3800 which is filed with your income tax return.

Please Note: Forms 5884/5884-C and 3800 go with the income tax return; not employment tax return.

Have questions? Consult your tax professional for answers.

 

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