Tax Credit Report Summary:
Below is an explanation of the tax credit report and answers to common questions you may have.
Work Opportunity Tax Credit:
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for individuals from certain targeted groups who have consistently faced significant barriers to
employment. The Consolidated Appropriation Act, 2021 (Section 113 of Division EE P.L. 116-260) authorized the extension of the Work Opportunity Tax Credit (WOTC) until December 31, 2025.
https://www.irs.gov/businesses/smal l-businesses-self-employed/work-opportunity- taxcredit#
Invoice:
Fee is the % of the total tax credit calculated and processed. Payment is due in full within 15 days. Accepted method of payments Check, ACH. We do not accept credit card payments.
Tax Credit Report:
To be provided to your CPA or Tax Preparer.
Report reflects all certified employees that worked the minimum required 120 hours.
Credit amount calculated is based upon the payroll data provided to TCG.
The WOTC is calculated at 25% of the first-year qualified wages up to $6,000.00 when employed at least 120 hours but less than 400 hours and 40% employed 400 or more hours.
25% Tier: represents the credit earned on wages for employees that worked between 120-399 hours.
40% Tier: represents the credit earned on wages for employees that worked between 400 or more hours.
Certifications:
Official document issued by the state DOL certifying the employee under the WOTC Program.
Only certifications that met the 120 hour retention period are included.
Authorizes your company to claim a tax credit upon meeting minimum retention requirements.
Certifications should be kept for your records.
Limitations on the Credits:
The credit is limited to the amount of federal income tax liability owed.
A taxable business may apply the credit against its business income tax liability, and the normal carry-back and carry-forward rules
Unused credits can be carried forward up to 20 years and carried back one year.
Claiming the Credit:
Employers file IRS Form 5884 to claim the work opportunity credit for qualified first- and/or second-year wages they paid to or incurred for targeted group employees during the tax year.
The tax credit amount is claimed as a general business credit on IRS Form 3800 General Business Credits
For an S-Corp the credits are reported under Schedule K-1 of the corporate return and flow to shareholders personal income tax return.