CHICAGO - Illinois businesses qualified for $67 million in income tax credits after hiring individuals covered through the Work Opportunity Tax Credit (WOTC), the Illinois Department of Employment Security (IDES) announced today. The federal incentive reduces an employer’s cost of doing business while helping those most in need gain valuable work experience. IDES administers the federal program.
“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.”
The WOTC incentives allow business owners to keep more of their money by hiring from historically disenfranchised groups. In 2011, the majority of the tax credit involved businesses who hired an individual receiving state financial assistance. In this way, the program benefits the state as a whole, as new jobs increase the likelihood that the state support will be reduced or no longer needed.
More than 27,000 individuals were hired under the WOTC program in 2011. Tax incentives 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 would be entered in federal tax returns in 2012.
The specific categories include 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 and who have received vocational or employment training; summer youth employees; qualified food stamp recipient; and a qualified supplemental security income beneficiary.
Employers claim the federal tax credit using IRS Form 5884. Looking at 2012, businesses can apply for WOTC certification for a new hire in three steps. Pre-screen individuals using IRS Form 8850, called the “pre-Screening Notice & Certification Request for Work Opportunity Credit.” Then, complete the ETA Form 9061, called the “Individual Characteristics Form.” Finally, mail the original, signed forms to IDES’ WOTC Unit within 28 days of the new hire’s start state. It is recommended that copies of the form be kept with the business. Forms and details are available at www.ides.illinois.gov/wotc
The IDES supports economic stability by administering unemployment benefits, collecting business contributions to fund those benefits, 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.