Revamped Work Opportunity Tax Credit Extended Until 2011

The Work Opportunity Tax Credit (WOTC), designed to help move people with significant barriers to employment into jobs, has been extended from January 1, 2008 through August 31, 2011, with the signing into law of the “Small Business and Work Opportunity Tax Act of 2007” by President Bush.

That legislation can reduce an employer’s cost of doing business by providing a federal income tax credit for hiring targeted job seekers. The tax credit for hiring most target group members can be as much as $2,400 for each new adult hire, $1,200 for each new summer youth hire, and $9,000 for each new long-term family assistance recipient hired over a two-year period.

Upgrades to the WOTC provided by the legislation (effective for job start dates of May 26, 2007 and after) include changes to the “High-Risk Youth” Target Group, expanding the age range from 18-24 to 18-39.

A “rural renewal county” zone has been added covering the following counties: Butler, Dallas, Macon, Perry, Sumter, and Wilcox.

Another enhancement is a new “Disabled Veteran” category for veterans entitled to a service-connected disability of 10 percent or higher who are hired within one year of having been discharged or released from active duty, or who have been unemployed for six of the last 12 months.

The Vocational Rehabilitation category has been expanded to include individuals who complete a work plan developed and implemented by an employment network.

In addition, the Alternative Minimum Tax limitation on WOTC effective for taxable years after December 31, 2006 has been waived.

For further information on the revamped WOTC Program, contact: WOTC Unit, Employment Service Division, Alabama Department of Industrial Relations, 649 Monroe St., Montgomery, AL 36131; or call 334-353-8030. Additional details are available at www.doleta.gov/business/Incentives/opptax/.