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New Law: Now is the Time to Take Advantage of the Work Opportunity Tax Credit

6/17/2021

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Your reasonable efforts are rewarded with the Work Opportunity Tax Credit.

And, thanks to new legislation, the rules are now in place for a more extended period than typical.

If you need to hire employees for your firm, you should be aware of this tax break that reduces your taxes dollar for dollar.

Presume your company recruits someone from a specific demographic. In that situation, you can claim a portion of the individual's wages as part of the federal Work Opportunity Tax Credit (WOTC).
A Summary of the Credit

The credit usually equals 40% of a qualifying employee's qualified first-year pay, up to a maximum wage amount of $6,000. This equates to a credit of up to $2,400 (40 percent x $6,000).

Of course, some employees refuse to exercise. The credit rate for an employee who completes at least 120 but fewer than 400 hours of service is reduced to 25% of eligible first-year compensation. This equals a maximum credit of $1,500 (25 percent of $6,000).

Employees Who Qualify

Your new recruit must be certified as a targeted group member by the appropriate State Workforce Agency to be eligible (SWA). As the employer, you have two options.
If you would like our help with the WOTC, please don't hesitate to contact us.
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    Important Disclosures


    Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.

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    To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
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    These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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    Author

    Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion.  Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.

    Keana founded this website and decided and created this blog page to offer a space for those seeking knowledge to understand, however not to be confused with advice or planning strategies.

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