LAW OF THE LAND: Employers — hire a vet and earn federal tax credits
In a recently issued special edition Tax Tip, the Internal Revenue Service is reminding employers that now is the time to hire a veteran in order to qualify for the federal “Work Opportunity Tax Credit” worth thousands of dollars. But you have to hire the vets prior to midnight on Dec. 31, 2013. Here are some key factors that the IRS wants employers to know about the Work Opportunity Tax Credit (“WOTC”):
Hiring Deadline. Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012 but The American Taxpayer Relief Act of 2012 extended it until the end of this year.
Maximum Credit. The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.
Credit Factors. The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.
Disabled Veterans. Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.
State Certification. Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.
For more on this topic, employers can visit IRS.gov and enter “WOTC” in the search block.
Bill Martin is a former B-52 and B-1 pilot and Senior Attorney for the Federal Deposit Insurance Corporation and is admitted to the U.S. Tax Court. He is currently a partner in the law firm of Keefe, Anchors & Gordon in Fort Walton Beach, Fla.