With the school year ending and U.S. businesses hiring summer help, now is a good time for tax preparers to remind their business clients of the Work Opportunity Tax Credit (WOTC). As competition continues to rise among employers seeking seasonal workers, this credit may help businesses cope with the increased amounts they must pay their summer help this year.
The WOTC credit is equal to 40% of up to $6,000 in wages paid to an individual who:
- Is in their first year of employment
- Is a certified member of one of 10 targeted groups
- Performs at least 400 hours of service for an employer
The maximum credit that can be claimed is usually $2,400. A 25% rate applies for employees who perform at least 120 hours of work, but less than 400.Unfortunately, this credit can only be claimed for the first year a seasonal employee is hired.