WOTC Questions: How are the Tax Credits Calculated?

How are the WOTC Tax Credits Calculated?

At CMS, as Work Opportunity Tax Credit (WOTC) experts and service providers since 1997, we receive a lot of questions via our website.

CMS Says: The Work Opportunity Tax Credit is equal to 25% or 40% of a new employee’s first-year wages, up to the maximum for the target group to which the employee belongs. Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours. Typically 10-15% of new hires may be eligible, and the average tax credit is $2,400 based on 400 hours.

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