At CMS, as WOTC experts and service providers since 1997, we receive a lot of questions via our website. This week we received a great question that, surprisingly, we don’t hear that often:
How do you calculate first and second year credit?
Firstly, in order to be eligible for a two-year WOTC credit, the new hire must have been qualified as a long-term Temporary Assistance for Needy Families (TANF) Recipient (See Target Groups).
The employer may claim a tax credit equal to $9,000 total over a two-year period, after the employee works at least 400 hours, as follows:
- 40% of $10,000 of first year wages, up to the maximum credit of $4,000, and
- 50% of $10,000 of second year wages, up to the maximum tax credit of $5,000.
CMS makes tracking this data easy. As part of our service, we track the hours and wages of your qualified new hires to make sure you get the maximum tax credit.
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