Form 8850, also known as the Pre-Screening Notice and Certification Request for the Work Opportunity Credit, is a form provided by the Internal Revenue Service (IRS) that is used to determine an individual's eligibility for the Work Opportunity Tax Credit (WOTC) program. The WOTC is a federal tax credit designed to incentivize businesses to hire individuals from different target groups who face barriers to employment.
Here are some relevant points about who should complete Form 8850:
1. Employers: Form 8850 should be completed by employers who are interested in claiming the Work Opportunity Tax Credit for hiring eligible employees. This form helps employers identify and pre-screen individuals who belong to specific target groups, which allows them to apply for the tax credit.
2. Eligible Employees: The form should be completed by eligible employees, including those who belong to target groups such as veterans, long-term unemployment recipients, recipients of Temporary Assistance for Needy Families (TANF), ex-felons, Supplemental Nutrition Assistance Program (SNAP) recipients, Social Security income recipients, and vocational rehabilitation referrals.
3. Pre-Screening Process: Employers must provide the Form 8850 to the eligible employee or have the employee complete it themselves within 28 days after the individual starts work. The form includes information about the employee's target group status, employment start date, and employer details.
4. Compliance Requirements: To claim the Work Opportunity Tax Credit, employers must also submit Form 9061 or 9062, which are certifications issued by designated local agencies. These certifications verify the employee's eligibility for the credit based on their respective target group.
5. Filing Deadlines: Form 8850 should be submitted to the state workforce agency within 28 days after the eligible employee starts working. The employer should also submit Form 8850 to the appropriate IRS office, either together with their business tax return or separately within 28 days of the employee's start date.
6. Work Opportunity Tax Credit Benefits: By completing Form 8850 and participating in the WOTC program, eligible employers can receive tax credits ranging from $1,200 to $9,600 per qualified employee, depending on the target group and the number of hours worked.
It's important for employers to understand the eligibility criteria for the Work Opportunity Tax Credit and properly complete Form 8850 to take advantage of potential tax savings while helping individuals from different target groups gain employment opportunities.