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Summertime … and the Tax Credits Are Easy

Are you looking to hire teenagers this summer to help around the warehouse or office? If you employ a member of a “targeted” group, you can claim a Work Opportunity Tax Credit (WOTC) on your return. In fact, there's a special tax credit for summer youth employees.

The special summertime credit is equal to 40% of the first $3,000 of wages for a qualified worker. A qualified “summer youth employee” is defined as someone who:

*Performs services between May 1 and September 15;

*Is certified as being 16 or 17 years old on the hiring date (or, if later, on May 1 of the calendar year involved); and

*Has his or her principal home within an empowerment zone or enterprise community.

If a summer youth employee subsequently qualifies as a member of another targeted group, you can't count the wages twice. Note that the WOTC for other disadvantaged workers generally is 40% of the first $6,000 of wages.

Finally, if a credit has been claimed for a particular worker by a different employer, you can still claim the credit for the same employee as long as he or she otherwise qualifies.

Note: The WOTC officially expired on December 31, 2005. However, Congress is currently working on reinstating the WOTC and final action is expected soon.

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