The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC) for hiring Veterans. The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act allows employers to claim the WOTC for Veterans certified as qualified Veterans and who begin work before January 1, 2013.
Summary of the Credit
The credit can be as high as $9,600 per qualified veteran for for-profit employers, or up to $6,240 for qualified tax-exempt organizations. The amount of the credit will depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. For example, a for-profit employer can claim a credit of:
• Up to $2,400 for hiring a veteran who has been unemployed for at least four weeks.
• Up to $5,600 for hiring a veteran who has been unemployed for more than six months.
• Up to $4,800 for hiring a veteran with a service-connected disability.
• Up to $9,600 for hiring a veteran with a service-connected disability and who has been unemployed for more than six months.
Please refer to your CPA for further details.
Certifying A Veteran
All employers must obtain certification that an individual is a member of the targeted group before the employer may claim the credit. The process for certifying the Veterans for this credit is the same for all employers. Eligible employers must file Form 8850 with their respective state workforce agency. Normally, that must happen within 28 days after the eligible worker begins work. But,
under a special rule employers have until June 19, 2012, to complete and file for Veterans hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22, 2012.
After the required certification is secured, for-profit employers claim the tax credit as a general business credit against their income tax. Tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C.
John von Harz
Compliance Specialist
Hire A Hero
