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Frequently Asked Tax Questions

Childcare Credit, Other Credits - Other Credits

  1. I heard there is a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the work opportunity tax credit?
  2. What is the health coverage tax credit and how can I learn more about it?

Rev. date: 06/20/2016

I heard there is a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the work opportunity tax credit?

The work opportunity tax credit (WOTC) provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs.
The Protecting Americans from Tax Hikes Act of 2015 extended the WOTC for members of targeted groups hired after December 31, 2014, and before January 1, 2020. The benefit is a 40 percent credit generally on the first 6,000 of wages paid to new hires in the first year of employment.
You must obtain certification from your state employment security agency that an individual is a targeted group member before you claim the credit. Generally, you obtain certification by submitting Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, to the state employment security agency. You must submit the form not later than the 28th day after the individual begins work for you. However, please see Notice 2016-22 for details of transitional relief and Notice 2016-40 for additional transitional relief for the Form 8850 submission deadline.
Newly hired individuals from the following targeted groups might qualify you for this tax credit:
You can calculate the credit by completing Form 5884, Work Opportunity Credit, with the business' tax return. Taxpayers claim the credit on Form 3800, as part of the General Business Credit.
For more information, see Work Opportunity Tax Credit.

Rev. date: 01/22/2016

What is the health coverage tax credit and how can I learn more about it?

The health coverage tax credit (HCTC) is a refundable tax credit that pays 72.5% of qualified health plan premiums for certain trade-affected workers, retirees, and their families. The HCTC expires after December 31, 2019.  For more information, see Health Coverage Tax Credit.