Work Opportunity Tax Credit – Eligibility
Employers who decide on an elective basis to hire individuals from one or more targeted groups are eligible for a Work Opportunity Tax Credit.
The Targeted Groups for Work Opportunity Credit
The targeted groups include families receiving food stamps, unemployed veterans, disconnected youth (those between the ages of 16 and 25 who have not worked or gone to school in the past 6 months) and individuals economically disadvantaged, disabled or recipients of payments from different welfare programs.
Work Opportunity Tax Credit Calculation
The Work Opportunity Tax Credit is equal to 40% of qualified first year wages up to $6,000, ($12,000 for qualified veterans), with a maximum amount of credit available of $ 2,400.
For each employee who has no more than 120 and less than 400 work hours, the credit is reduced to 25% of the first $6,000 with a maximum amount of credit available of $1,500.
A maximum benefit amount of $4,800 is available for each new disabled veteran hired.
Who Does Not Qualify For WOTC?
An employer who has an employee eligible, but working less than 120 hours in the first year of employment cannot qualify for this credit.
You cannot claim wages paid to family members or other relatives when filing for Work Opportunity Tax Credit.
