Work Opportunity Tax Credit (WOTC)

The WOTC is a federal income tax credit that can be claimed by employers who hire employees from one of nine targeted groups.

The WOTC can be as much as:

  •     $2,400 for each new adult hire,
  •     $1,200 for each summer youth hire,
  •     $4,800 for each new disabled veteran hire, and
  •     $9,000 for each new long-term Temporary Assistance for Needy Families (TANF) recipient hired over a 2-year period.

 

Federal Bonding Program

The Federal Bonding Program, sponsored by the U.S. Department of Labor, serves as a tool to secure the job placement of ex-offenders and other high-risk applicants by issuing Fidelity bonds to businesses who offer jobs to workers in "at risk" groups. These bonds are business insurance policies that protect the employer in case of any loss of money or property due to employee dishonesty.

The bonds are a "guarantee" to the employer that the person hired will be an honest worker. The Fidelity Bonds issued are insurance policies from the Travelers Property Casualty insurance company. The McLaughlin Company in Washington, DC is the agent for Travelers in managing the program nationwide.

The bond is given to the employer free-of-charge, and serves as an incentive to the company to hire a job applicant who is an ex-offender or has some other risk factor in their personal background. The employer is then able to employ the worker without taking any risk of dishonesty on the job. It insures the employer for any type of stealing by theft, forgery, larceny, or embezzlement.

The initial Fidelity bond is issued for a six-month period. A total of $5,000 bond coverage is usually issued, with no deductible amount of liability for the employer. Larger bond amounts can possibly be issued if the certified agency issuing the bonds has acquired a special bond package and has determined that larger bond amounts are appropriate.

Qualifications:

  • The worker must meet the State’s legal age for working.
  • Workers must be paid wages with Federal taxes automatically deducted from pay.

The program will cover any person who is a “risk” due to their being in one or more of the following groups:

  • Ex-offenders with a record of arrest, conviction or imprisonment; anyone who has ever been on parole or probation, and/or anyone who has a police record.
  • Ex-addicts who have been rehabilitated through treatment for alcohol and drug abuse.
  • Anyone with a poor credit record or declared bankruptcy.
  • Persons lacking a work history who come from families with low income.
  • Anyone dishonorably discharged from the military.
  • Anyone who has committed a fraudulent or dishonest act in the past.

Restrictions

The bond will not cover liability due to poor workmanship, job injuries, or work accidents. Self-employed persons cannot be covered.

 

Empowerment Zone Employment Credit

The Empowerment Zone Employment Credit is an incentive to businesses that are located in an empowerment zone (EZ) to hire and retain employees who also live in the EZ. Businesses are eligible for a wage credit of up to $3,000 per eligible employee.

Empowerment Zones are distressed urban and rural areas nationwide that are in need of revitalization. The Empowerment Zone Initiative brings communities together through public and private partnerships to create the investment necessary for economic development. The Federal government assists these targeted communities by providing tax incentives, grants, loans and technical assistance.

Both full time and part time employees may qualify, as long as they work at least 90 days during the year in which the credit is claimed. The credit amount is 20% of the first $15,000 of wages paid to the employee.

The credit is renewable each year, and there is no limit to the number of employees a business can claim, as long as each employee lives in the EZ. Both newly hired and current employees are eligible.

Qualifying wages do not include any wages used in applying for either the Work Opportunity Tax Credit or the Welfare-to-Work Tax Credit. Also, the $15,000 maximum qualified wages for the Empowerment Zone Employment Credit will be reduced by any wages used to figure other tax credits for an employee.

 

Renewal Community Employment Credit

The Renewal Community Employment Credit is an incentive to businesses that are located in an renewal community (RC) to hire and retain employees who also live in the RC. Businesses are eligible for a wage credit of up to $1,500 per eligible employee.

Renewal Communities are distressed urban and rural areas nationwide that are in need of revitalization. The Renewal Community Initiative brings communities together through public and private partnerships to create the investment necessary for economic development. The Federal government assists these targeted communities by providing tax incentives, grants, loans and technical assistance.

The credit is 15% of the qualified wages paid during a calendar year, up to $10,000 per employee. Both newly hired and current employees are eligible. The credit is renewable each year, and there is no limit to the number of employees a business can claim, as long as each employee lives in the RC. Both full time and part time employees may qualify.

Qualifying wages do not include any wages used in applying for the Work Opportunity Tax Credit. Also, the $10,000 maximum qualified wages for the Renewal Community Employment Credit will be reduced by any wages used to figure other tax credits for an employee.

* Information on this page is provided as a courtesy only. For up-to-date information, visit the Employ Florida Marketplace, and click “employers,” then “employer incentives.”