Calculating the Work Opportunity Tax Credit (WOTC)
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. 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?
- John Doe gets hired by ACME Construction & starts on Monday, November 17, 2025
- 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)
- He works 248 hours in 2025, and earns $5,146
- Between Jan – Oct 2026 he works 1,733 hours & earns a total of $35,960
- ACME will be eligible for a credit of $1,287 on their 2025 tax return, ($5,146 x 25%)
- 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%)