Problem 12-25 (LO. 3) Green Corporation hires six individuals on January 4, 2017
ID: 2585055 • Letter: P
Question
Problem 12-25 (LO. 3) Green Corporation hires six individuals on January 4, 2017, all of whom qualify for the work opportunity credit. Three of these individuals receive wages of $8,500 during 2017, and each individual works more than 400 hours during the year. The other three individuals each work 300 hours and receive wages of $5,000 during the year. a. Enter the amount of Green's work opportunity tax credit: b. If Green pays total wages of $140,000 to its employees during the year, how much of this amount can Green deduct, assuming that the work opportunity credit is taken?Explanation / Answer
Solution:
The amount of Green's work opportunity tax credit : $10,950
Green pays total wages of $140,000 to its employees during the year, how much of this amount can Green deduct, assuming that the work opportunity credit is taken? $129,050
Explanation:
1) The work opportunity tax credit for 2017 is as follows:
No of qualified employees * Limit on wages for each employee
= 3 * [($6,000 * 40%)= 3* $2,400 =$7,200
No of qualified employees * wages for each employee
= 3 * [($5,000 *25%)= 3*$41,250= $3,750
Total work opportunity tax credit= $7,200+$3,750=$10,950
2) The wage deduction for 2017 is computed as:
= (8500/400 - 5000/300 )/3 per year per worker
=21.25-16.66/3
=4.59/3
= $1.53