Employers can qualify for a tax credit known as the work opportunity tax credit (WOTC) that is worth as much as $2,400 for each eligible employee (higher amounts for certain veterans and other special categories). The
credit is available on an elective basis for employers hiring individuals from
one or more of nine targeted groups. The amount of the credit available to
an employer is determined by the amount of qualified wages paid by the employer. Generally, qualified wages consist of wages attributable to ser-
vice rendered by a member of a targeted group during the one-year period beginning with the day the individual begins work for the employer. The
recent passage of the Small Business and Work Opportunity Tax Act made some significant changes to the provisions of the WOTC:

• AMT - The WOTC will offset the Alternative Minimum Tax (AMT).
  
  
• Extended by 44 Months - The WOTC is extended by 44 months to Aug. 31, 2011 for most targeted groups. Historically, this credit has
  been renewed by Congress on a temporary or year-by-year basis,
  and had been scheduled to expire at the end of 2007. More employers may now take advantage of the credit, because they will have more
  time to include the targeted hirees in their strategic planning. It is effective for individuals who begin work for the employer after
  May 25, 2007.
  
  
• High-Risk Youth WOTC - The WOTC requirements are eased for
  so-called “high-risk youths” who begin work for the employer after
  May 25, 2007. These changes should especially benefit employers in “rural renewal counties,” which are counties outside of metropolitan areas that had a net population loss in the 1990s.
  
  (1) Substitutes “designated community residents” for “high-risk
  youths” as a “targeted group,”
  
  (2) Substitutes a definition of a designated community resident for
  the definition of a high-risk youth by providing that a “designated community resident” is an individual who is certified by the designated local agency as having attained age 18 but not age 40 on the hiring
  date, and as having his principal place of abode within an empower-ment zone, enterprise zone, renewal community or rural renewal
  county and
  
  (3) For a designated community resident, wages that qualify for the WOTC don't include wages paid or incurred for services performed while the individual's principal place of abode is outside an empowerment zone, enterprise community, renewal community or
  rural renewal county.
  
  
• Expanded “Ticket to Work” – A provision expanding the WOTC to cover “Ticket to Work” plan participants is effective for individuals who begin work for the employer after May 25, 2007. The Act adds, as a third qualifying format, an individual work plan developed and implemented by an employment network with respect to which the requirements of the Social Security Act are met.
  
  
• Disabled Veterans - The WOTC is enhanced for employing certain disabled veterans who begin work for the employer after May 25, 2007. The Act provides that a “qualified veteran” is an individual who is a veteran and is certified by the designated local agency as:
  
  (1) Meeting the Food Stamp requirement, or
  
  (2) Entitled to compensation for a service-connected disability, and
  
  o Having a hiring date that isn't more than one year after having been discharged or released from active duty in the U.S. Armed Forces, or
  
  o Having aggregate periods of unemployment during the one-year
  period ending on the hiring date that equal or exceed six months (the compensation-for-disability requirement).