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Tax incentives promote welfare-to-work hiring

Posted online

by Ann Bucy

for the Business Journal

The Job Council of the Ozarks will soon be receiving $900,000 for each of the next two years. "This money is coming from the federal government to help put people to work," said Robert Simpson, the Job Council's director.

Under Temporary Assistance to Needy Families (TANF), a reform program with a five-year limit, welfare recipients will be expected to either join or rejoin the work force. While this money will help the Job Council and its agenda of helping people get assimilated into the job market, TANF comes with specific requirements that must be met, Simpson said.

Seventy percent of each $900,000 lump sum must be spent on long-term welfare recipients (those who have received welfare for 30 months or more) and have specified labor-market deficiencies, or noncustodial parents who are not able to pay child support (the custodial parent is a long-term welfare recipient). The other 30 percent goes to those receiving temporary assistance, according to Ramona George, the council's work training supervisor.

"All of these recipients will go through life-skills training: things like learning how to budget; the advantages of working; personal health and hygiene; and child, family and friend management," George said. After they're working, there will be follow-up periods at three, six and nine months to see if they continue working.

Shirley Click, manager of the local Employment Security Office, said her job is to "help anyone and everyone find suitable employment." The agency publicizes job openings on the Internet and has a resource center with job listings.

"We empower people to see what job will meet their needs and help them determine things like, 'Is this job too far for me to travel,' 'Is this starting wage OK?"' Click said.

The Employment Security Office also provides training for interview skills and dressing-for-success tips for people referred to the agency by the Division of Family Services.

In addition, employers may be eligible for tax credits for hiring welfare recipients.

There are two tax incentive programs available, the Work Opportunity Tax Credit and the Welfare-To-Work Tax Credit. The following information regarding these programs was provided by the Springfield Employment Security Office.

The Work Opportunity Tax Credit provides employers up to $2,400 in tax savings per eligible employee. Eligible employees are those that fit into the following categories:

?A member of a family that has received Aid to Families with Dependent Children or TANF for any of the last nine months.

?An 18-, but not yet 25-year-old member of a family that:

a. Received food stamps for the last six months, or

b. Received food stamps for at least three of the last five months but is no longer eligible to receive them.

?An 18-, but not yet 25-year-old resident of one of the federally designated enterprise communities located in urban St. Louis, urban Kansas City or Mississippi County.

?A 16-, but not yet 18-year-old enterprise community resident hired between May 1 and Sept. 15 as a summer youth employee.

?A veteran who is a member of a family that received food stamps for at least a three-month period within the last 15 months.

?A disabled person who completed or is completing rehabilitative services from a state agency of the U.S. Department of Veterans Affairs.

?An ex-felon who was convicted or released from prison within the last 12 months and during the last six months was a member of a low-income family.

?A person who received supplemental security income (SSI) for any month ending within the last 60 days.

With the exception of summer youth employees, the federal tax credit is 40 percent of the first $6,000 in wages for a maximum credit of $2,400 per qualified employee.

The employee must work for at least 400 hours or 180 days in order for the 40 percent credit to be claimed. If the individual separates before 400 hours but has worked for at least 120 hours, a credit of 25 percent can be claimed.

To qualify for this tax cut, the employee must have been hired after Sept. 30, 1996, and before July 1, 1998.

The Welfare-To-Work Tax Credit is a two-year program that provides employers tax savings up to $8,500 per eligible, long-term welfare recipient whose first day of work is after Dec. 31, 1997, and before May 1, 1999.

Qualified employees include:

?A member of a family that has received AFDC/TANF benefits for at least 18 consecutive months ending on the date of hire, or

?A member of a family that received AFDC/TANF benefits for any 18 months beginning after Aug. 5, 1997, for applicants hired within two years after the date the 18-month period is reached, or

?A member of a family whose AFDC/TANF eligibility expired under a federal or state law after Aug. 5, 1997, for applicants hired within two years after this eligibility expired.

The first-year credit is equal to 35 percent of the first $10,000 in qualified wages ($3,500 maximum) and the second-year credit is 50 percent of the first $10,000 in qualified wages ($5,000 maximum).

For more information on these programs, call the Employment Security Office at 895-6899.

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