WOTC Questions: Once an employee hits the 400 hours mark can an employer continue to earn tax credits on them or have they hit the max?

At CMS, as Work Opportunity Tax Credit (WOTC) experts and service providers since 1997, we receive a lot of questions via our website’s chat box that we try to answer:

Once an employee hits the 400 hours mark can an employer continue to earn tax credits on them or have they hit the max?

CMS Says: Hi once the employee reaches 400 hours of employment you count the wages. If they have reached $6,000 in wages that is the maximum unless the individual is a Veteran or a Long-Term TANF recipient.

Most Target Groups:

  • 400 Hours /  $6,000 wages = 40% Tax Credit of up to $2,400
  • Long Term TANF Target Group:
    • $10,000 in wages = 40% Tax Credit of up to $4,000 (first year) and
    • $10,000 in wages = 50% Tax Credit of up to $5,000 (second year)

Tax Credit Values For Hiring Qualified Veterans:

  • Receives SNAP (Food Stamps) Benefits
    • Worked at least 120 hours but less than 400 hours Up to $1,500 (25% of $6,000 of first-year wages)
    • Worked at least 400 hours Up to $2,400 (40% of $6,000 of first-year wages)

Entitled to compensation for service-connected disability:

  • Hired 1 year after leaving service
    • Worked at least 120 hours but less than 400 hours Up to $3,000 (25% of $12,000 of first-year wages)
    • Worked at least 400 hours Up to $4,800 (40% of $12,000 of first-year wages)
  • Unemployed at least 6 months
    • Worked at least 120 hours but less than 400 hours Up to $6,000 (25% of $24,000 of first-year wages)
    • Worked at least 400 hours Up to $9,600 (40% of $24,000 of first-year wages)

Unemployed:

  • At least 4 weeks
    • Worked at least 120 hours but less than 400 hours Up to $1,500 (25% of $6,000 of first-year wages)
    • Worked at least 400 hours Up to $ 2,400 (40% of $6,000 of first-year wages)
  • At least 6 months
    • Worked at least 120 hours but less than 400 hours Up to $ 3,500 (25% of $14,000 of first-year wages)
    • Worked at least 400 hours Up to $5,600 (40% of $14,000 of first-year wages)

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