Tax Law and Business Organization Strategy

More New Hires will Qualify for Jobs Tax Credit

Recent changes to the Jobs Tax Credit may allow many more employers to claim a tax credit for new hires, particularly in the Texas Panhandle and Tri-State area. Before the changes, the law provided a tax credit to employers who hired disadvantaged workers. The tax credit can be as much as $2,400 for each person hired.

The credit has been expanded to include a new category of eligible workers: individuals who are at least 18 year old, but less than 40 on the date of hire, and who reside in a county that lost population through the 1990s. The IRS has just identified those counties, and they include:

  • Bailey, Briscoe, Castro, Collingsworth, Cottle, Deaf Smith, Floyd, Gray, Hall, Hemphill, Hockley, Hutchinson, Lamb, Oldham, Roberts, and Wheeler in Texas
  • Harding and Quay in New Mexico
  • Beaver, Cimmaron, Custer, Dewey, Ellis, Greer, Harper, Harmon, Kiowa, Roger Mills, and Woodward in Oklahoma.

A list of all counties meeting that definition can be found in the Instructions to IRS Form 8850. The new law becomes effective for hires made after May 25, 2007. 

The “catch” in the law is the requirement that employers must submit a certification request to their state workforce agency within 28 days of the date of hire using IRS Form 8850.

The employee does not actually have to be a “disadvantaged” person. They only have to reside in one of the listed counties at the time of hire and throughout the period they receive wages that qualify for the credit. In fact, highly paid or managerial employees who happen to reside in a listed county will qualify.

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