By Karen Axelton
It’s hard to believe, but many returning military veterans have a hard time finding civilian employment once they return from active duty or deployment. Your small business can help a veteran and enjoy tax credits at the same time thanks to recently expanded tax credits created by the VOW to Hire Heroes Act of 2011.
There’s one catch–your small business needs to act soon. Under the newly expanded Work Opportunity Tax Credit (WOTC), employers can receive thousands of dollars in tax credits, but only if the veteran hired started work on or after November 11, 2011, but before January 1, 2013.
The VOW to Hire Heroes Act added two new categories to the existing qualified veteran targeted group and expanded the WOTC to include certain tax-exempt employers. The credit may be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt employers.
In order to be considered a qualified veteran, the individual must:
- Have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability, and
- Not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date.
There are certain other qualifications that may apply, which you can find at the IRS’s FAQ page about the Work Opportunity Tax Credit.
The amount of the tax credit your small business or nonprofit organization is able to claim will depend on several factors, including how long the veteran was unemployed before being hired, the number of hours the veteran works and the salary or wages the veteran receives during the first year in your employment. If you hire a veteran with service-related disabilities, your business may be eligible for the maximum tax credit.
In order to claim the tax credit, employers will need to file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency within 28 days after the qualified veteran starts working at the business. To find your state workforce agency, visit the U.S. Department of Labor’s WOTC website. Visit the IRS website for additional details about qualification and paperwork required.
Image by Flickr user Sam0hSong (Creative Commons)