Calculating the Work Opportunity Tax Credit (WOTC)

[CtrlAltDeduct]

For anyone with experience calculating the Work Opportunity Tax Credit (WOTC), I would appreciate a second opinion on two things:

1. Although the credit is currently set to expire 12/31/25, my understanding is as long as the EE begins work on or prior to 12/31/25, the company will be eligible to use first-year wages to take the credit on their 2025 and\or 2026 tax return(s)? Source: IRC ?51(c)(4)

2. Is my math correct on this example?

1. John Doe gets hired by ACME Construction & starts on Monday, November 17, 2025
2. John is a veteran who has a service-connected disability, and he’s been unemployed for the past 6 months (eligible for a maximum amount of qualified wages of $24,000)
3. He works 248 hours in 2025, and earns $5,146
4. Between Jan – Oct 2026 he works 1,733 hours & earns a total of $35,960
5. ACME will be eligible for a credit of $1,287 on their 2025 tax return, ($5,146 x 25%)
6. They will be eligible for a credit of $7,542 on their 2026 tax return ($24,000-$5,146 = $18,854. $18,854 x 40%)

[Rapid Robert]

It's unfortunate that no one so far has responded, especially as you are a new member of this forum. For my part, I've never dealt with WOTC so have no answers for you, maybe it is more of a specialty topic. There is a full page of explanation/summary about WOTC in the TheTaxBook desk reference, which hopefully you you have access to. Also all the IRS regs/notices that mention WOTC are listed and linked if you use the search function. Maybe the AI assistant TaxBert from our forum host might help? Good luck.

[TaxGuyBill]

[*]ACME will be eligible for a credit of $1,287 on their 2025 tax return, [I]($5,146 x 25%)

I do NOT have any experience with the credit, but I would look into if it should be a 40% credit for 2025. Even though there were less than 400 hours in 2025, the "first year" (fiscal year) was over 400 hours.