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    Small businesses can benefit from the work opportunity tax credit

    IRS Tax Tip 2022-70, May 5, 2022

    The work opportunity tax credit is a federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

    This credit is available for wages paid to certain individuals who begin work on or before December 31, 2025.

    Here's more information about the requirements for this valuable credit.

    The work opportunity tax credit is equal to 40% of up to $6,000 wages paid or incurred with a maximum credit of $2,400, for an employee who:

    • is in their first year of employment.
    • is certified as being a member of an eligible group.
    • works at least 400 hours of services for that employer.

    This is a one-time credit for each new hire and an employer cannot claim the credit for employees who are rehired.

    A 25% rate applies to wages for individuals with 120 to 399 hours of service.

    Up to $24,000 in wages may be considered in determining the WOTC for certain qualified veteran targeted group.

    Who is eligible f

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