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Forbes Tax Credits for Veterans
Remember the newly expanded tax credit for hiring veterans that was passed last year? The IRS has finally issued more guidance on the credit. The Returning Heroes and Wounded Warriors Work Opportunity Tax Credits was part of the VOW to Hire Heroes Act of 2011, which was announced on Veterans Day last year. The credit give employers a tax credit for hiring a qualified veteran. A qualified veteran is defined as a veteran with aggregate periods of unemployment of at least 4 weeks but less than 6 months in the year prior to being hired or with aggregate periods of unemployment of 6 months or more in the year prior to being hired. The law allows employers a tax credit per veteran. The maximum credit is applicable for employers who hire vets with service-related disabilities. Other factors that affect the amount of the credit include the length of the veteran’s unemployment before hire, hours worked and the amount of wages paid. Also important? Whether the employer is a for-profit employer or a tax-exempt organization. The IRS has also released the applicable forms. The federal form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, (downloads as a pdf) must be filed by June 19, 2012 for employers who make a qualified vet hire between November 22, 2011, and May 22, 2012. Eligible employers who make a hire after May 22, 2012, must file the federal form 8850 within 28 days after work begins. The IRS has confirmed that the form 8850 may be transmitted electronically or via fax, assuming that the state workforce agencies accept submissions in those formats. To claim the credit, an employer figures the amount on the federal form 5884, Work Opportunity Credit, (downloads as a pdf) and entered on a federal form 3800, General Business Credit, (downloads as a pdf) to be filed together with the employer’s income tax return. For more information, check out Notice 2012-13 (downloads as a pdf).
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