Discussion:Work Opportunity Tax Credit
From TaxAlmanac
Discussion Forum Index --> Consumer Questions --> Work Opportunity Tax Credit
| 29 June 2007 | |
| In 2007 Work Opportunity Credit is suppose to not subject to AMT Tax
See Statement - From Legislation AMT Treatment The New Law Treats the Tentative Minimum Tax as being zero for purposes of determining the tax liability limitation with respect to the WOTC. The WOTC may offset AMT Tax liability. In our Partnership we will have 250,000 wages Qualified Work Opportunity Credit at the 40% rate, which would equal Credit of 100,000. When we receive this credit we must also decrease our wages expense by 100,000. Then the partnership will issue a K-1 to the individual with a credit of 100,000. At the individual level there is no AMT preference form the K-1. The 100,000 Credit though is limited from form 3800. This is the limitation from regular tax to AMT tax difference. So that only 4,000 Credit is Allowed in the current year. Net result to individual is Picks up 100,000 of Income due to reduction of wages, 4,000 tax credit, and 96,000 Credit carryover. Is this the correct results for 2007? Thank You, L Sugarman | |
| 1 July 2007 | |
| Not enough information here. The only limitation that you have here is the 25% of the regular tax liability in excess of $25,000. There should be no limitation imposed by the AMT system. We would need to know the amount of the regular tax liability for each partner in order to answer this question. | |
| 2 July 2007 | |
| Under the 2007 tax act, the Sec. 38(c)(1)(A) limitation is $586,243 – 0 = $586,243. The Sec. 38(c)(1)(B) limitation is 586-243 – [(586,243 – 25,000) x .25] = $445,932. Since the subparagraph A limitation and the subparagraph B limitation are both higher than the actual credit, there will be no limitation. | |
| 14 August 2007 | |
| Does this mean the actual credit limitation is $140,311 ($586,243-$445,932) - The amount by which 25% of the tax liability exceeds $25,000 since business tax credits may not exceed 25% of the regular tax liability in excess of $25,000. | |
| 14 August 2007 | |
| I have WOTC and Tips Credit carryovers. Are they eligible to be used in 2007 since the effective date states the provision applies to credits determined (not originating) in taxable years beginning after December 31, 2006? | |
