New Business: IRS defines new groups for work credit

The work opportunity tax credit is available to businesses that hire workers from certain disadvantaged target groups. The credit is based on the first-year wages paid to qualifying employees.

The "American Recovery and Reinvestment Act of 2009" added two new groups to the list that qualifies for the work opportunity credit: unemployed veterans and disconnected youth. The IRS recently published the definitions of these new categories.

An unemployed veteran is one who left the military during the five years prior to being hired and who received unemployment benefits for at least four weeks during the year prior to being hired.

A disconnected youth is an individual age 16 through 24 who has not been regularly employed or attending school during the six months prior to being hired, and who lacks basic skills for employment.