The American Recovery and Reinvestment Act, enacted in February, added unemployed veterans returning to civilian life and “disconnected youth” to the list of targeted groups covered by the work opportunity tax credit (WOTC). The other targeted groups that could get you the tax credit include people, aged 18 to 39, who live in certain designated communities in 43 states and the District of Columbia; workers displaced by Hurricane Katrina; recipients of various types of public assistance; and certain veterans, summer youth workers and ex-convicts. The instructions for Form 8850 will give you the details and requirements for each of these groups.
In general, an unemployed veteran is a person who was discharged or released from the military during the five year period preceding the hiring date, and who received unemployment benefits for at least four weeks during the one-year period ending on the hiring date. A “disconnected youth” is defined as a person between the ages of 16 to 24 at the time you hire them who has not been regularly employed or attending school and who lacks the basic skills needed to be readily employable.
According to the IRS, any business that is planning to claim the newly-expanded work opportunity tax credit (WOTC) for eligible unemployed veterans and unskilled younger workers hired during the first part of 2009 has until August 17th to request the necessary certification required to be able to take the tax credits that come with hiring these workers. To make that request for certification from your state workforce agency for these or any of the other targeted groups, use the newly-revised Form 8850, which is now available on IRS.gov.
The certification requirement applies to all groups of workers except employees who were Hurricane Katrina victims. Normally, a business must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But under a special rule, businesses have until Aug. 17, 2009, to file this form for unemployed veterans and disconnected youth who begin work on or after Jan. 1, 2009 and before July 17, 2009. Notice 2009-28 and the instructions for Form 8850 provide details on this special rule.