The purpose of the WOTC is to help individuals who qualify as a member of a target group to get a job and to help employers who hire these individuals by giving them a credit on their federal taxes.
The WOTC target groups are as follows:
The amount of the credit varies by target group. The tax credit for target groups A, B, C, D, E, G, and H is 40 percent of qualified first year wages up to $6,000 if the individual is retained for at least 400 hours. If the individual is retained less than 400 hours but at least 120 hours a 25 percent tax credit is available on qualified first year wages up to $6,000.
The exception is target group F (summer youth). The maximum amount of wages to which the tax credit may be applied shall not exceed $3,000.
The tax credit for target group I, longterm recipient of TANF/AFDC hired on or after January 1, 1998, is 35 percent of first year qualified wages up to $10,000 and 50 percent of second year qualified wages up to $10,000. The individual must be retained at least 180 days or 400 hours. In certain circumstances you may be able to claim either the 40 percent of $6,000 tax credit or the 35 percent of $10,000 tax credit.
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