Ever since the disaster that struck when Hurricane Katrina hit, the community has been looking for ways to get back on its feet. With Katrina tax credits, the Federal government has come up with an income tax credit to encourage employers to hire more people who live within the disaster-struck area and those who lost their jobs because of the event. Basically, the businesses that hire employees outside of the affected area can get a tax credit if they hire people affected by Hurricane Katrina. This means that the people should have begun work after August 29, 2005 and before December 31, 2005.
Usually, employers are expected to file WOTC forms to take advantage of the Katrina tax credits but in this special case the standard forms are waived. There are new forms that are developed and these are the ones that the businesses should fill out for the IRS. Other Katrina tax credit benefits include tax breaks for those who provide temporary housing for those who lost their homes during the storm. So anybody who is providing rent-free housing to Hurricane Katrina victims for at least 60 days will be able to take a tax deduction up to $500 per person. A maximum deduction for this kind of credit is up to $2000.
Of course, the Katrina tax credits are mostly aimed at employers and they will be able to enjoy a number of tax breaks for employing victims of the hurricane. WOTC or work opportunity tax credit is just one of those tax breaks and they can get tax credit just for hiring individuals. They will still have to fall under certain group categories and this includes people who lived in an area that is eligible for assistance. Employers were able to claim the credit for the following two years.