In March 2014, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits. Each employee was paid $11,000 during 2014. Only one of the individuals continued to work for Gray Corporation in 2015, earning $9,000 during the year. No additional workers were hired in 2015. Gray Corporation's work opportunity tax credit amounts for 2014 and 2015 are:

Question

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Gray Corporation hired two individuals who were certified as long-term recipients of family assistance benefits, which makes them eligible for the work opportunity tax credit. The credit is equal to 40% of the first $6,000 of wages paid to each employee certified as a member of a targeted group, which includes long-term recipients of family assistance benefits.

In 2014, both employees were paid $11,000, but the credit is only available on the first $6,000 of wages, so the credit for each employee is $2,400 ($6,000 x 40%). Since Gray Corporation hired two qualifying employees, the credit for 2014 is $4,800 ($2,400 x 2).

In 2015, only one of the individuals continued to work for Gray Corporation and was paid $9,000. Again, the credit is only available on the first $6,000 of wages, so the credit for the remaining employee is $2,400. Therefore, the credit for 2015 is $2,400.

Adding the credits for 2014 and 2015, we get a total credit of $7,200, which is closest to choice B: $8,000 in 2014 and $4,500 in 2015.

In March 2014, Gray Corporation Hired Two Individuals, Both of Whom