kathy1104
09-23-2003, 11:34 AM
This subject came up in another forum and I posted this information that helped my husband find a job last time he got out, I thought maybe it might help someone else. The IRS gives a tax credit to business who hire certain employees, including ex-felons, the amount of the credit is up to $2,400 (actual tax dollars) if the person works at least 400 hours for the year. It's a great credit, I do taxes for a living and I've been able to talk a few of my business clients into hiring ex-felons to take this credit. Check it out for yourselves and maybe it will help someone get a job, because it's basically like the IRS will pay the employer $2400 if they hire you. Check it out for yourselves.
Page 13 of the IRS Publication 954 expains the credit, you can find it at:http://www.irs.gov/pub/irs-pdf/p954.pdf
The way it works is this, when he gets out of prison he has to fill out form 8850, get the parole officer to sign it saying he just got out of prison, and take it to the state unemployment office, they will sign it, and then he gives it to his employer and the employer will get an extra $2,400 back on their taxes when they file at the end of the year. That is, assuming that he works at least 400 hours for the year. My husband did this when he got out last time and his boss was very happy to get back an extra $2400 at the end of the year. Now he hires ex-felons on a regular basis. The credit was supposed to expire last year but it was extended in the new tax laws this year. Here is the text of it from the IRS Publication.
Work Opportunity Credit
The work opportunity credit provides businesses with
an incentive to hire individuals from groups that have
a particularly high unemployment rate or other special
employment needs. Your business does not have to
be in an empowerment zone, enterprise community, or
renewal community to qualify for this credit. You can
claim the credit if you pay or incur “qualified first-year
wages” to a “targeted group employee.”
Targeted group employee.A targeted group em-ployee
is any employee who has been certified by your
state employment security agency (SESA) as a:
1) Recipient of assistance under Temporary Assist-ance
for Needy Families (TANF),
2) Veteran,
3) Ex-Felon
4) High-risk youth,
5) Vocational rehabilitation referral,
6) Summer youth employee,
7) Food stamp recipient, or
8) Supplemental security income (SSI) recipient.
The employee must meet the requirements explained
in the instructions to Form 8850.
State certification required. An employee is not
considered a targeted group employee without SESA
certification. To receive certification, submit Form 8850
to your SESA.
You must either:
1) Receive the certification by the day the individual
begins work, or
2) Do both of the following:
a) Complete Form 8850 by the day you offer the
individual a job, and
b) Submit the form to your SESA by the 21st day
after the individual begins work.
Qualified first-year wages.Qualified first-year wages
are qualified wages you pay or incur for work performed
by a targeted group employee during the 1-year period
beginning on the date the individual begins work for
you. Qualified wages are generally wages subject to the
Federal Unemployment Tax Act (FUTA) without regard
to the FUTA dollar limit, but not more than $6,000 each
tax year for each employee ($3,000 each tax year for
a summer youth employee).
If the work performed by the employee during more
than half of any pay period qualifies under FUTA as
agricultural labor, the first $6,000 of that employee's
wages subject to social security and Medicare taxes
are qualified wages. For a special rule that applies to
railroad employees, see section 51(h)(1)(B) of the
Internal Revenue Code.
Nonqualified wages. See Form 5884 for a com-plete
list of wages that do not qualify for the credit.
Some of the most common wages that do not qualify
include wages you pay or incur to an employee who:
1) Has worked for you for more than 1 year,
2) Is your relative or dependent,
3) You rehired, if he or she was not a targeted group
employee when employed earlier, or
4) Does not work for you for at least 120 hours.
Amount of credit.The following table shows the rate
you apply to qualified first-year wages you pay or incur
each tax year to a targeted group employee who works
the number of hours shown. The table also shows the
maximum credit you can claim each tax year for each
targeted group employee.
Claiming the credit.Use Form 5884 to claim this
credit.
Effect on salary and wage deduction. In general,
you must reduce the deduction on your income tax re-turn
for salaries and wages by the amount of your work
opportunity credit.
Table 2.Rate and Maximum Credit Each Tax Year
for Each Targeted Group Employee
Maximum
Qualified
First-Year Maximum
Hours Worked Rate Wages Credit
At least 400 ............................... 40% $6,000 $2,400
Fewer than 400 but at least 120 .... 25% 6,000 1,500
*$3,000 for a summer youth employee
Page 13
Page 13 of the IRS Publication 954 expains the credit, you can find it at:http://www.irs.gov/pub/irs-pdf/p954.pdf
The way it works is this, when he gets out of prison he has to fill out form 8850, get the parole officer to sign it saying he just got out of prison, and take it to the state unemployment office, they will sign it, and then he gives it to his employer and the employer will get an extra $2,400 back on their taxes when they file at the end of the year. That is, assuming that he works at least 400 hours for the year. My husband did this when he got out last time and his boss was very happy to get back an extra $2400 at the end of the year. Now he hires ex-felons on a regular basis. The credit was supposed to expire last year but it was extended in the new tax laws this year. Here is the text of it from the IRS Publication.
Work Opportunity Credit
The work opportunity credit provides businesses with
an incentive to hire individuals from groups that have
a particularly high unemployment rate or other special
employment needs. Your business does not have to
be in an empowerment zone, enterprise community, or
renewal community to qualify for this credit. You can
claim the credit if you pay or incur “qualified first-year
wages” to a “targeted group employee.”
Targeted group employee.A targeted group em-ployee
is any employee who has been certified by your
state employment security agency (SESA) as a:
1) Recipient of assistance under Temporary Assist-ance
for Needy Families (TANF),
2) Veteran,
3) Ex-Felon
4) High-risk youth,
5) Vocational rehabilitation referral,
6) Summer youth employee,
7) Food stamp recipient, or
8) Supplemental security income (SSI) recipient.
The employee must meet the requirements explained
in the instructions to Form 8850.
State certification required. An employee is not
considered a targeted group employee without SESA
certification. To receive certification, submit Form 8850
to your SESA.
You must either:
1) Receive the certification by the day the individual
begins work, or
2) Do both of the following:
a) Complete Form 8850 by the day you offer the
individual a job, and
b) Submit the form to your SESA by the 21st day
after the individual begins work.
Qualified first-year wages.Qualified first-year wages
are qualified wages you pay or incur for work performed
by a targeted group employee during the 1-year period
beginning on the date the individual begins work for
you. Qualified wages are generally wages subject to the
Federal Unemployment Tax Act (FUTA) without regard
to the FUTA dollar limit, but not more than $6,000 each
tax year for each employee ($3,000 each tax year for
a summer youth employee).
If the work performed by the employee during more
than half of any pay period qualifies under FUTA as
agricultural labor, the first $6,000 of that employee's
wages subject to social security and Medicare taxes
are qualified wages. For a special rule that applies to
railroad employees, see section 51(h)(1)(B) of the
Internal Revenue Code.
Nonqualified wages. See Form 5884 for a com-plete
list of wages that do not qualify for the credit.
Some of the most common wages that do not qualify
include wages you pay or incur to an employee who:
1) Has worked for you for more than 1 year,
2) Is your relative or dependent,
3) You rehired, if he or she was not a targeted group
employee when employed earlier, or
4) Does not work for you for at least 120 hours.
Amount of credit.The following table shows the rate
you apply to qualified first-year wages you pay or incur
each tax year to a targeted group employee who works
the number of hours shown. The table also shows the
maximum credit you can claim each tax year for each
targeted group employee.
Claiming the credit.Use Form 5884 to claim this
credit.
Effect on salary and wage deduction. In general,
you must reduce the deduction on your income tax re-turn
for salaries and wages by the amount of your work
opportunity credit.
Table 2.Rate and Maximum Credit Each Tax Year
for Each Targeted Group Employee
Maximum
Qualified
First-Year Maximum
Hours Worked Rate Wages Credit
At least 400 ............................... 40% $6,000 $2,400
Fewer than 400 but at least 120 .... 25% 6,000 1,500
*$3,000 for a summer youth employee
Page 13