Black Company paid wages of $180,000, of which $40,000 was qualified wages for the work opportunity tax credit under the general rules. Black Company's deduction for wages for the year is:

Question

Quizplus · Accepted Answer

The deduction for wages under the general rules is equal to the total wages paid less any qualified wages used for other tax credits. Therefore, the deduction for wages for Black Company would be $180,000 - $40,000 = $140,000. However, the work opportunity tax credit is a general business credit and can be carried forward or back to other tax years if not fully used in the current year. Therefore, the deduction for wages is increased by the amount of qualified wages used for the work opportunity tax credit, which in this case is $40,000. Therefore, the total deduction for wages for Black Company is $140,000 + $40,000 = $164,000.

Black Company Paid Wages of $180,000, of Which $40,000 Was