Tax Credits for Hiring Veterans: What You Need to Know
The military prepares a soldier’s body and mind for battle, but it also prepares them for work outside the military. Veterans are a valuable asset for any company or corporation. Their unique discipline and experience make them an excellent hire for nearly any type of job. Many employers already understand this benefit, but do not know that hiring a veteran can also have a financial benefit too. The Work Opportunity Tax Credit (WOTC) is one of the many credits available to employers who hire veterans. For a greater understanding of this tax benefit and others, read on.
The WOTC was designed to help specific target groups of people get back to work. For the veteran community, this tax credit has been a welcome incentive to prospective employers. In late 2011, President Obama signed into law the VOW to Hire Heroes Act of 2011, the “Returning Heroes and Wounded Warriors Work Opportunity Tax Credits,” which amended and expanded the definition of the veteran group as recognized by the WOTC.
The available tax credits work for employers that are hiring veterans with the following employment or circumstantial criteria:
- A veteran who is a member of a family that received food stamps for at least a 3-month period during the previous 15-month period ending on the hiring date;
- A disabled veteran entitled to compensation for a service-connected disability, who has been:
- Hired within 1 year of discharge or release from active duty, OR
- Unemployed for at least 6 months in the year ending on the hiring date;
- A veteran who has been unemployed for:
- At least 4 weeks in the year ending on the hiring date; OR
- At least 6 months in the year ending on the hiring date.
To qualify for the WOTC incentive, the veterans eligibility must be verified. That means the prospective veteran employment candidate must have:
- Served on active duty 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 of more than 90 days that ended during the 60-day period ending on the hiring date.
If your veteran candidate meets these eligibility requirements, then congratulations. Your organization is well on its way to hiring a highly skilled and valuable team member. And, the best part is that this tax credit has been renewed through August 31, 2018!
To collect on these credits, your company must do the following:
- Complete IRS Form 8850 by the day the job offer is made.
- Complete ETA Form 9061, or complete ETA Form 9062 if the employee has been conditionally certified as belonging to a WOTC target group by a State Workforce Agency, Vocational Rehabilitation agency, or another participating agency.
- Submit the completed and signed IRS and ETA forms to your State Workforce Agency. Forms must be submitted within 28 calendar days of the employee's start date.
- Wait for a final determination from your State Workforce Agency. The determination will indicate whether the employee is certified as meeting the eligibility for one of the WOTC target groups.
- After the target group employee is certified by the State Workforce Agency, file for the tax credit with the Internal Revenue Service.
For additional information regarding veteran employment tax credits, visit: https://www.doleta.gov/business/incentives/opptax/
Written by Brook Appelbaum