As your company assesses its various hiring needs this spring, consider the tremendous impact your company could have on your community by hiring special needs adults while also achieving tax savings. One way to do this to hire employees who are qualified SSI recipients. This will qualify your company for the work opportunity tax credit ("WOTC"). Below is information on the credit specifically geared towards special needs adults.
Who is a qualified SSI recipient?
An individual is considered a qualified SSI recipient if the person is disabled, legally resides in the United States or certain territories, has income below certain limits and has applied for SSI benefits.
How much is the work opportunity tax credit ("WOTC")?
It is 25% of the "qualified first-year wages" for qualified SSI recipient employees who work between 120 hours and 400 hours during the year. It is 40% of the "qualified first-year wages" for qualified SSI recipient employees who work 400 hours or more during the year. The maximum wages that can be used to determine the credit per qualified SSI recipient employee is $6,000. Below is a chart illustrating the calculation. The company in this illustration is able to receive a credit of $5,400.
| Company ABC hires 3 employees who are qualified SSI receipients as follows: | |||||
|---|---|---|---|---|---|
| Qualified SSI recipient | Salary | Qualified first-year wages limitation | # of Hours | Applicable % | Work Opportunity Tax Credit |
| Employee #1 | $12,000 | $6,000 | 300 | 25% | $1,500 |
| Employee #2 | $10,000 | $6,000 | 250 | 25% | $1,500 |
| Employee #3 | $24,000 | $6,000 | 600 | 40% | $2,400 |
| $5,400 |
What are "qualified first-year wages"?
Compensation paid by you to the emloyee for work performed for your company during the one-year period beginning on the day the employee begins work. Payments that are considered wages for purposes of the federal unemployment tax count.
How can I learn more about the work opportunity tax credit?
Please contact Alyssa Rausch, CPA, MBA at Smolin, Lupin & Co., PA. at arausch@smolin.com or 862-881-4748.
Alyssa Rausch, CPA, MBA, is a tax manager at Smolin, Lupin & Co., PA. She is a member of the New Jersey Society of CPAs. Contact her at arausch@smolin.com or at 862-881-4748.
DVRS
At age fourteen, students with IEPs should be discussing transition planning with their IEP teams or 504 Committees. For students with intellectual, emotional or physical disabilities that will likely interfere with finding and maintaining suitable employment after graduation, the New Jersey Division of Vocational Rehabilitation Services (DVRS) should be on the radar screen. The mission of DVRS is to find employment for any disabled individual who wants to work.
While students are still in high school, they should know that DVRS is ready, willing and able to step in to help qualified students with vocational guidance and counseling. DRVR can help arrange opportunities for students to explore possible vocations. They can provide on the job training, as well as various other types of supports for students who qualify for an IPE, or Individualized Plan for Employment.
Parents of interested students can learn more, and get the process going, by requesting in writing that a DVRS representative attend the student's next IEP planning meeting or 504 Committee meeting.
Alex M. Hilsen, Esq., LL.M., is an Attorney at Sussan, Greenwald & Wesler. He specializes with estate issues, including Special Needs trusts, Wills and General Estate Planning. Contact him at alex@special-ed-law.com or at 609-409-3500.