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| NOVEMBER 18, 1999 |
By Karen E. Klein
Help for Employers Who Hire People on Public Assistance
A guide to federal and state tax incentives and other programs
Q: I run a music preproduction studio, and I'm wondering if there are any tax credits or other benefits for businesses that hire individuals who have been on public assistance. What part of the government should I contact to apply?
---- B.L.S., New York
A: There are indeed federal tax credits available to businesses that employ workers who have formerly received government assistance. State benefits vary but can include funds for job training, assistance for employing disabled workers, and tax credits for hiring in economically depressed regions.
The two major federal tax credits that are pertinent to your question technically expired this past June and are currently the subject of federal budget negotiations. They're expected to be renewed retroactively, however. They are the Welfare-to-Work Tax Credit (WtW) and the Work Opportunity Tax Credit (WOTC). To claim either credit, employers must certify that their new hires qualify by filing IRS form 8850 soon after the person is hired. You can get the proper forms from the Small Business Administration's Welfare-to-Work ToolKit, a guide that's available at the SBA's welfare-to-work Web page: www.sba.gov/welfare.
The WtW tax credit, which is designed to encourage long-term employment for people who have been on public assistance for a substantial amount of time, gives employers up to $8,500 in tax credits over two years. Workers must be on the job more than 400 hours or 180 days in a given year. The WOTC, which targets people who have been on welfare for a shorter period, gives employers up to $2,400 in tax credits for a given year and also applies to employees working at least 400 hours or 180 days. An employer can claim a $1,500 tax credit for qualified employees working at least 120 hours but less than 400 hours. When employees qualify under both programs, the employer can claim one tax credit or the other, but not both.
There is a great deal of online information on welfare-to-work benefits for employers. Along with the ToolKit, the SBA site includes a network of employers looking for qualified workers, an IRS memo outlining the details governing the tax credits, a video on employing former welfare recipients, and links to many other resources. Good information can also be found at the site of the Welfare to Work Partnership (www.welfaretowork.org) and the U.S. Labor Dept.'s Welfare-to-Work Web page (wtw.doleta.gov), which offers forms, documents, links to regional contacts, and a step-by-step guide for small-business owners.
In New York State, employer benefits vary from county to county. Tim O'Keefe, director of employer services in New York State's Labor Dept., says you may be able to qualify for state tax credits, job-training funds, or special geographic benefits. "The best thing to do is to call and ask for our Passport to Employment Kit, which explains all the benefits available and includes an 800 number for the employers to ask follow-up questions. That way we can help them identify which programs are available to meet their needs," O'Keefe says. Call (800) HIRE-992, or 447-3992. Or visit the agency's Web site, www.labor.state.ny.us, to request the kit.
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