Is your business hiring this summer? Employing certain teenagers and other individuals may qualify you for the Work Opportunity tax credit (WOTC), if you meet certain requirements. This tax break applies to a percentage of wages paid to new employees from certain target groups, including “qualified summer youth” workers.
Eligibility rules
A qualified summer youth employee must:
- Be age 16 or 17,
- Not have worked for you before,
- Work for your business during any 90-day period between May 1 and September 15, and
- Reside in a federal Empowerment Zone.
The credit for summer youth employees can be up to $1,200 per qualified worker. There’s no limit on the number of eligible youths you can hire and claim the WOTC for. However, you can’t claim it for employing dependents or relatives.
Certification rules
If you hire a 16- or 17-year-old for the summer, you must obtain certification that the individual is qualified. The process involves submitting an IRS form to a state workforce agency where your business is located. You must also meet certain deadlines.
To find out if a teenager lives in an Empowerment Zone, you can search an address using a U.S. Department of Housing and Urban Development tool at http://egis.hud.gov/ezrclocator.
Other qualified individuals
Be aware that the rules for hiring employees from other targeted groups who qualify for the WOTC are different from the rules for summer youth. These individuals include qualified long-term family assistance recipients, veterans, ex-felons and long-term unemployment recipients. The WOTC is also available if your business hires individuals, ages 18 to 39, who live in an urban Empowerment Zone or certain rural areas. The credit for hiring qualified individuals (other than summer youth) ranges from $2,400 to $9,600, depending on the target group of the employee and how many hours he or she has worked.
We can help
Contact us for more information about the WOTC and meeting the certification requirements for summer youth or other qualified workers.
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