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|Hire Vets - Tax Credits for Businesses|
How to Get Tax Credits for Hiring Veterans for Businesses
The VOW to Hire Heroes Act of 2011, enacted Nov. 21, 2011, provides an expanded Work Opportunity Tax Credit (WOTC) to businesses that hire eligible unemployed veterans and for the first time also makes the credit available to certain tax-exempt organizations.
The Returning Heroes Tax Credit provides incentives of up to $5,600 for hiring unemployed veterans, and the Wounded Warriors Tax Credit doubles the existing Work Opportunity Tax Credit for long-term unemployed veterans with service-connected disabilities, to up to $9,600.
This tax credit is for hiring the following eligible veterans:
• Short-term Unemployed: A new credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment compensation for at least 4 weeks.
• Long-term Unemployed: A new credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment compensation for longer than 6 months.Wounded Warrior Tax Credit
• Veterans with Services-Connected Disabilities: Maintains the existing Work Opportunity Tax Credit for veterans with service-connected disabilities hired within one year of being discharged from the military. The credit is 40% of the first $12,000 of wages (up to $4,800).
• Long-Term Unemployed Veterans with Services-Connected Disabilities: A new credit of 40% of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been in receipt of unemployment compensation for longer than 6 months.The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations.
To collect on this credit, an eligible employer must file Form 8850 with the state workforce agency within 28 days after the eligible worker begins work, but an exception has been granted to employers who hire veterans between Nov. 22, 2011 and May 22, 2011 -- if you are an employer that falls in this category, you have until June 19, 2012, to complete and file Form 8850. The 28-day rule applies to eligible veterans hired on or after May 22, 2012.
The IRS has released the guidance and forms that employers can use to claim the newly-expanded tax credit for hiring veterans. The IRS has also announced that employers will have more time to file the required certification form for employees hired on or after November 22, 2011, and before May 22, 2012.
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