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Iowa employers who hire hard-to-place job applicants may be eligible to receive federal income tax credits under one of two programs—Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit (WtWTC). Iowa employers that meet certain criteria are allowed an additional deduction on their Iowa income tax returns for hiring ex-offenders or persons with disabilities.

Tax credits are tied to the amount of wages the employee earns and the number of hours worked. The maximum credit under WOTC goes to an employer whose employee earns $6,000 or more. After figuring other tax requirements, the net effect is a tax break of about $1,500 for hiring an individual who earns $6,000. The maximum tax credit can be as much $2,400 if the employee maintains employment for 400 hours or 180 days. To find out more about the Work Opportunity Tax Credit, call (515) 725-2631 or visit http://www.doleta.gov/business/incentives/opptax/.

The tax credit for an employer under WtWTC can be about $3,500 for hiring an individual who is earning $10,000 or more. The employer can get a tax credit of up to $5,000 if the individual continues working for the employer for a second year. To find out more about Welfare-to-Work tax credits and business incentives, call (515) 725-2631 or visit http://www.doleta.gov/business/incentives/opptax/.

Employers who qualify for both the Work Opportunity Tax Credit and Welfare-to-Work Tax Credit may choose which of the tax credits is most advantageous for a given tax year.

To qualify for either tax incentive programs, employers must hire workers from the following groups: welfare recipients, Food Stamp recipients age 18 through 24 from low income families, disabled persons referred from Vocational Rehabilitation Services and Department for the Blind, and the U.S. Department of Veterans Affairs, Supplemental Security Income (SSI), economically disadvantaged veterans and low income ex-felons. 

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Iowa employers that meet the following criteria are allowed an additional deduction on their Iowa income tax returns for hiring persons with disabilities. This deduction is 65 percent of the wages paid in the first 12 months of employment; the deduction ceiling is $20,000 per employee. Only those employers that meet the "small business" definition can claim the deduction for employing persons with disabilities. Visit http://www.iowa.gov/tax/educate/78578.html for more information.

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Iowa employers that meet certain criteria are allowed an additional deduction on their Iowa income tax returns for hiring ex-offenders. This deduction is 65 percent of the wages paid in the first 12 months of employment; the maximum deduction is $20,000 per employee. To find out more about this tax benefit for employers visit the following links http://www.iowa.gov/tax/educate/78522.html, and number 24. u. located at http://www.state.ia.us/tax/1040EI/Line/03Line24.html.

 

 
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