Tax-Savings Tips June 2021
Benefit Big from the Work Opportunity Tax Credit The Work Opportunity Tax Credit rewards your good deeds. And now, because of new legislation, the rules are in place for longer than usual. If you need to hire workers in your business, this dollar-for-dollar reducer of your taxes is one to know about. Suppose your business hires a member of a targeted group. In that case, you can claim the potentially lucrative federal Work Opportunity Tax Credit (WOTC) for some of the wages paid to the individual. Overview of the Credit The credit generally equals 40 percent of qualified first-year wages paid to an eligible employee , up to a maximum wage amount of $6,000. That translates into a maximum credit of $2,400 (40 percent x $6,000). Of course, some employees don’t work out. The tax code recognizes that and reduces the credit rate to 25 percent of qualified first-year wages for an employee who completes at least 120 but fewer than 400 hours of service. That transl