Tax Tip of the Week
July 17, 2007

The credit, which directly offsets your tax liability when you employ workers from "targeted groups," has a history of repeated, last minute renewals. Now, under the Small Business and Work Opportunity Tax Act of 2007, it will be available through August 31, 2011.

In addition to providing more permanence, the Act also broadens several categories of qualified workers and doubles one of the wage thresholds used to calculate the credit. The maximum amount varies depending on the type of employees you hire, but following the rules could reduce your taxes significantly. Here are three general guidelines.

Seek qualifying employees. In order for your business to qualify for the Work Opportunity Tax Credit, employees must be members of one of nine "targeted groups." Targeted groups include summer youth employees, veterans, supplemental security income recipients, and food stamp recipients, among others.

Be aware of certification requirements. Request a certificate from your State Employment Security Agency or Work Force Agency verifying a prospective employee's eligibility as a member of a targeted group. Forms usually must be completed before hiring or before employment begins.

Keep track of employment dates and wages paid. The amount you can claim is generally based on hours worked and wages paid during the first year an employee works for you (up to a specified threshold).

For specific information about how you can benefit from the Work Opportunity Tax Credit, please call our office. We'll be happy to give you more details.

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