REPORT FOR DUTY! Support your country AND earn tax credits.
When you hire a Veteran, you are not only being patriotic but you may also qualify for a tax credit. Veterans are generally described as a highly skilled workforce, tech savvy, leaders and motivated. Those are great traits for a new employee and it can also shave money off your tax bill at the same time.
Current Tax Credit
The Work Opportunity Tax Credit (WOTC) is a federal tax credit that offers an incentive to hire individuals from nine targeted groups that have consistently faced significant barriers to employment, including Veterans. The WOTC applies to new employees who begin work before January 1, 2012. The credit is based on the qualified first-year wages and can reach a maximum of $4,800 for disabled Veterans and $2,400 for other groups.
The new employee must belong to one of the following groups:
- Disabled Veterans entitled to compensation for a service-connected disability and hired within one year of discharge or release from active duty or unemployed for at least 6 months of the year ending on the hiring date; or
- Veterans who are members of a family that received Supplemental Nutrition Assistance (SNAP) Program (food stamps) for at least a 3-month period during the 15-month period ending on the date of hire; or
- Vocational Rehabilitation Referrals – disabled persons who completed or are completing rehabilitative services approved by a state-certified agency, the Ticket-to-Work program, or the U.S. Department of Veterans Affairs; or
- Long-Term TANF Recipients – any veteran who is a member of a family that received or is receiving Temporary Assistance for Needy Families benefits may also be eligible under this target group.
Note: With the exception of the Disabled Veterans group, non-Veterans can also qualify for the WOTC. In addition, the other five WOTC targeted groups include designated community residents, qualified summer youth, ex-felons, other TANF recipients and Supplemental Security Income recipients.
Employers apply for and receive certification from their State Workforce Agency (SWA) that the new hire is a member of a targeted group. An IRS Form and Department of Labor Form must be submitted to the SWA no later than 28 calendar days after the new hire begins work.
President Obama has recently proposed two new tax credits for Veterans. The Returning Heroes Tax Credit would provide a maximum credit of $4,800 for hiring unemployed Veterans. The Wounded Warrior Tax Credit would extend the credit for Disabled Veterans detailed above another two years and double the maximum credit to $9,600.
The WOTC is a powerful incentive when hiring new employees, especially Veterans. Please contact us if you want some more specifics on the credit and how it can benefit your business.