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:
What are the carry back and carry forward rules for using the WOTC tax credit?
CMS Says: The WOTC tax credits rules are the same as general business credits. You can carry forward unused tax credits for up to twenty (20) years & back one (1) year.
From the Instructions for Form 3800 General Business Credit (Link PDF on IRS Website):
If you have an unused credit after carrying it back 1 year (5 years for a credit from oil and gas production from marginal wells), carry it forward to each of the 20 tax years after the year of the credit. Any qualified business credits (as defined in section 196(c)) that are unused after the last tax year of the 20-year carryforward period (or at the time an individual taxpayer dies or other taxpayer, such as a corporation or partnership, ceases to exist) may be taken as a deduction in the earlier of:
• The tax year following the last tax year of the 20-year carryforward period, or
• The tax year in which the individual taxpayer dies or other taxpayer ceases to exist.
About Our WOTC Screening Services
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