Illinois businesses qualified for $67 million in income tax credits by hiring workers covered through the Work Opportunity Tax Credit (WOTC) in 2011, the Illinois Department of Employment Security (IDES) recently announced. The federal incentive, administered in Illinois by IDES, reduces an employer’s cost of doing business while helping those most in need gain valuable work experience.
“This valuable program helps a business owner improve the bottom line and offers a hand up to those who want to make a better life for themselves and their family,” IDES Director Jay Rowell said. “This is real progress in helping businesses compete, assisting individuals to find gainful employment, and improving the Illinois economy. It also shows that employers increasingly view IDES as an employment agency.”
WOTC incentives allow business owners to keep more of their money by hiring from historically disenfranchised groups. In 2011, Illinois employers hired more than 27,000 workers under the WOTC program. Most of the qualifying workers were receiving state financial assistance. The program therefore benefits the state by reducing reliance on state-supported services.
The credits range from $2,400 in one year to $9,600 over two years, depending on the new hire. The $67 million in savings represents 2011 activity that will be entered in federal tax returns in 2012.
Workers qualifying for WOTC credits include the following:
- individuals receiving Temporary Assistance for Needy Families
- qualified military veterans
- qualified ex-felons
- a designated community resident who lives in a renewal zone
- vocational rehabilitation referrals with a physical or mental impairment who have received vocational or employment training
- summer youth employees
- qualified food stamp recipients
- qualified supplemental security income beneficiaries
Employers should note that qualifications for veterans were expanded in November 2011 as part of the federal Vow to Hire Heroes Act. For more information on the credit, visit www.doleta.gov/.
To claim the federal tax credit, employers must use IRS Form 5884. Businesses can apply for WOTC certification for new hires by doing the following: 1) pre-screen individuals using IRS Form 8850, the “Pre-Screening Notice & Certification Request for Work Opportunity Credit;” 2) complete ETA Form 9061, the “Individual Characteristics Form;” and 3) mail the original, signed forms to IDES’ WOTC Unit within 28 days of the new hire’s start state.
IDES recommends keeping copies of WOTC forms. Forms and details are available at www.ides.illinois.gov/wotc.
IDES supports economic stability by administering unemployment benefits, collecting business contributions to fund them, connecting employers with qualified job seekers, and providing economic information to assist career planning and economic development. It does so through nearly 60 offices, including Illinois workNet centers.