Question

Olenka Corporation hires 13 individuals on March 12, 2020, all of whom qualify for the work opportunity credit. Nine of these individuals receive wages of $16,500 during 2020, and each individual works more than 400 hours during the year. The remaining four employees worked 100 hours and earned $2,100 during the year. a. Calculate the amount of Olenka's work opportunity credit. $fill in the blank 1 b. If Olenka pays total wages of $312,000 to its employees during the year, how much of this amount can Olenka deduct, 2020, assuming the work opportunity credit is taken

Answer 1

a. $21,600

b. $290,400

Step-by-step explanation:

a. The amount of work opportunity credit that can be claimed is subject to a limit of $6,000. 40% can be claimed for those who work 400 hours and above and none can be claimed for those who worked fewer than 120 hours.

= 9 employees * 6,000 limit * 40%

= $21,600

b. Deductible amount is:

= Total wages - Work opportunity tax credit

= 312,000 - 21,600

= $290,400