Why 8850 Form Credits
Why 8850 Form Credits
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Why 8850 Form Credits 2016-2019

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Instructions and Help about Why 8850 Form Credits

Hi I'm Kelly get would pay smart payroll services I'm Sean per Baker with gifts CPAs I'm we're here to present work opportunity tax credit better known as wattsy so what is wattsy wattsy is a federal tax credit available to employers who hire individuals from eligible target groups with significant barriers to employment live watching there's a potential for reduced tax liabilities employers hiring target groups may be eligible to reduce their federal income tax liability as much as $9,000 employers make the hiring decisions watsi reduces an employer's cost of doing business while helping those in need fine and retain good jobs you get to make the decision on who you're hiring for many other state agencies you have a list of people that you can hire from in this scenario you do the hiring and then finally the US economy benefits the success and growth of this income tax credit for private sector businesses is beneficial for all who participate while increasing America's economic growth and productivity so how does watse work any private sector business that hires a new employee from an eligible target group may apply for watse in addition the tax credit is available to certain tax-exempt organizations that hire new employees from the watsi veterans target group veterans long-term or short-term Temporary Assistance for Needy Families events Supplemental Nutrition Assistance Program recipients or food stamps designated community residents vocational rehabilitation referrals ex-felons Supplemental Security income recipients summer youth employees both the designated community residents and summer youth employees must come from a Koz so who is not eligible relatives and dependents of the employer former employees regardless of how long it has been since they last worked for the employer so if you're just finding out about watse and you have recently hired an employee who would qua by you cannot fire them and rehire them in order to get the credit lastly majority owners of the business do not qualify how to calculate the tax credit the requirements are as follows employees must work at least 120 hours in the first year of employment for the employer to qualify to claim the tax credit with the Internal Revenue Service so if you have someone that you hired and they only work a hundred hours and then they leave they would not be eligible for the credit after the employee has worked at least 120 hours the employer may claim a tax credit equal to 25 percent of the new hires first year of qualified wages the maximum tax credit on first year wages is between 750 and $6,000 depending on the eligible target group after working at least 400 hours the employer may claim a tax credit equal to 40% of the new hires first year of wages the maximum tax credit on first year wages is between 1200 and 9600 dollars depending on the else will target group this credit is a non-refundable credit which means that if you have a $5,000 credit but let's say you only have 2,500 dollars of income tax you would only be able to claim $2,500 of the credit the other $2,500 you would be able to carry back one year or carry forward up to 20 years another note that this is a permanent tax credit the credit has maximum amounts those amounts depend on a the target groups it also depends on the number of hours that they've worked like was stated before if they work less than 120 hours they will not be eligible for the credit they're the credit ranges in value if they've worked between 120 to 400 hours and then there is another range for the credit once they've worked at least 400 hours how do I apply the application and process involves by stats please note that prior to claiming the tax credit with the eye an employer must request and receive certification from the state work agency SWA stating that the new hire is a member of at least one of the wattsy target groups step 1 new hires must fill out a RS form 8850 pre-screening notice and certification requests for the Work Opportunity Tax Credit to pre-screen employees and make a written request to their SWA to certify the new hire as a member of the wat C target group in other words as you hire employees you must have them fill out the form 8850 you cannot select one employee over another employee to fill out the form all new hires must fill it out if you choose one over the other you'll have a discrimination issue so make sure that everybody even if they don't qualify fills out form 8850 once you've determined that the 8850 that the person may be part of a target group using the employer fill out the form 1961 for 90 61 is a list of the documentation and additional information required to get the determination letter the both of these forms must be submitted to your state work agency within 28 days of the start date of the employee if it is not within 28 days don't bother doing it they won't give you any credit it is very important that both of these forms be sent to the State Workforce agency by the 28th day after hire step four the State Workforce agency will send you a determination letter this can take up to a year sometimes even longer depending on this state once you've received the determination letter you can then move forward with claiming the tax credits the state agency may come back to you during that time period before giving you a final determination requesting more information please be aware that you need to provide that information before you get that credit and the de final determination letter is what you need before you can apply for the credit last step is filing for the credit with the IRS after receiving certification

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