In March 2017, 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 2017. Gray Corporation's work opportunity tax credit amounts for 2016 is:

Question

Quizplus · Accepted Answer

The work opportunity tax credit (WOTC) is a federal tax credit available to employers who hire individuals from certain targeted groups, including those who are certified as long-term recipients of family assistance benefits. The credit amount is calculated based on a percentage of the employee's first-year wages, up to a maximum amount. For long-term family assistance recipients, the maximum credit amount is 40% of their first-year wages, up to $6,000 per employee. Therefore, for two employees who were each paid $11,000, the maximum credit amount would be $4,800 (40% of $11,000 x 2 = $8,800). However, since the credit is limited to the amount of income tax liability owed by the employer, the credit amount for 2017 is $8,000 (assuming Gray Corporation owed at least $8,000 in income tax for 2017).

In March 2017, Gray Corporation Hired Two Individuals, Both of Whom