Tax Break for Hiring Veterans
Businesses that want to take advantage of a new law that provides tax breaks for hiring unemployed veterans or jobless veterans with disabilities must act fast to apply to get thousands of dollars in benefits. Companies have just 28 days after the hire to apply for benefits under the VOW to Hire Heroes Act, which President Barack Obama signed into law on Nov. 21, 2011.
The Obama administration and Congress worked together on the legislation to extend and expand tax benefits to companies that hire veterans, especially veterans who served in Iraq and Afghanistan.
The jobless rate for all veterans fell to 7.5 percent in January 2012, down sharply from 9.9 percent the previous year and below the national average of 8.3 percent, according to data from the Bureau of Labor Statistics (BLS). However, the unemployment rate for veterans who were on duty in Iraq and Afghanistan remained high at 9.1 percent in January 2012, BLS reported.
Veterans who served in these wars tend to be young and have less college education and corporate experience than others. This might make them unattractive to some employers that have many applicants to select from in the large post-recession labor market. However, many learn skills in the military that are valuable in the civilian world, including managing expenses for major operations, doing large-scale logistics, and providing emergency medical care to the wounded.
The Vow to Hire Heroes Act continues the Work Opportunity Tax Credit-already in existence-for veterans with service-connected disabilities, which has a maximum of $4,800. In addition, it offers businesses a new tax credit of:
• 40 percent on the first $6,000 in wages (up to $2,400) for hiring veterans who have been unemployed at least four weeks.
• 40 percent on the first $14,000 in wages (up to $5,600) for hiring veterans who have been unemployed for longer than six months.
• 40 percent of the first $24,000 in wages (up to $9,600) for hiring veterans with service-related disabilities who have been unemployed for longer than six months.
Some companies look for veterans for vacant positions. Others select the best candidate and then determine after hire whether that person would qualify for veteran-based tax breaks.
Nonprofit and for-profit companies that hire a veteran must submit an Internal Revenue Service Form 8850 and either a Department of Labor Employment and Training Administration Form 9061 or 9062 to their local Work Opportunity Tax Credit (WOTC) coordinator to get certification for the tax credits.
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