The recent Small Business Act has expanded the Jobs Tax Credit in a very significant manner that may have an impact on your business. For many years, the tax law has incented employers to hire disadvantaged workers by providing tax credits. The tax credit can be as much as $2,400 for each person hired (40% x 1st $6,000 of wages paid in first year of employment, assuming 400 hours worked).
The new category of eligible workers includes an individual who has attained age 18 but not age 40 on the date of hire, and who resides in a county that lost population through the 1990s. The IRS has just identified those counties. In our area, examples of these Iowa counties are:
Clay, Emmet, Hancock, Humboldt, Kossuth, Palo Alto, Pocahontas, Winnebago and Worth.
The new law is effective for individuals hired after May 25, 2007. However, employers have only 28 days after the date of hire to submit a certification request to their state workforce agency. IRS Form 8850 Pre-Screening Notice and Certification Request for the Work Opportunity Credit is used for this purpose.
Under the new definition, the individual does not need to be a disadvantaged person. They must simply reside in a rural county with the proper definition of a population loss, and continue to reside in that location during the period they received qualifying wages from your business. This worker, in fact, could be a highly paid or managerial employee who simply happens to reside in a county that has experienced population loss. Some of the other eligibility rules include:
 | The employee must not have previously worked for the employer. |
| The employee must not be the employer’s dependent or a related party to the employer. |
| The employee must have worked at least 120 hours to qualify for any credit. |
| The wages paid cannot be a payment in kind wage. |
Our firm is available to help you with the forms needed to qualify for this credit. We can also answer any questions you have on the Jobs Tax Credit. Please feel free to contact either of our offices. Also for a complete listing of Rural Renewal Counties and additional information check out the instructions for IRS Form 8850.