Wednesday, October 7, 2009

Tax Credits for Hiring Veterans

The passing of the American Recovery and Reinvestment Act of 2009 has expanded the Work Opportunity Tax Credit Program to include new provisions for hiring veterans, so that employers can earn a tax credit of up to $2400 or $4800, for each eligible veteran hired in 2009 and 2010.

What is an eligible veteran?

There are 2 categories of eligible veterans:

Unemployed Veterans

  • Veteran must have served on Active Duty, with an honorable discharge, and be hired within 5 years of their separation date.

  • Veteran must have received unemployment compensation for a minimum of 4 weeks within the previous one-year period.

  • Your organization can claim a one year tax credit of 40% of up to the first $6,000 in wages, or $2400.

Disabled Unemployed Veterans

  • Veteran must have a greater than 10% service connected disability, and be hired within 1 year of their military discharge date.

  • Veteran must have aggregate period of unemployment within the previous one-year period that equal or exceed 6 months.

  • Your organization can claim a one year tax credit of 40% of up to the first $12,000 in wages, or $4800.

What should you do to file for the credit?

IRS 8850 (Pre-Screening Notice and Certification Request for the Work Opportunity Credit) - The applicant must complete page 1 prior to hire, and the employer must complete page 2 once the applicant has been hired. This form must be postmarked within 28 days of hiring the veteran.

ETA 9061 (US Department of Labor, Individual Characteristics Form) - When completing this form, if you are filing for the Unemployed Veterans credit, use the notation “UV” in Box 20. If filing for the Disabled Unemployed Veterans Credit, use the notation “DV” in Box 20. This form should accompany IRS 8850.

You will need to mail both forms to the WOTC Coordinator within your State Workforce Agency (do not mail to the IRS). For the name and contact information of the WOTC Coordinator for your state, click here.

Have you taken advantage of the tax credit for hiring a veteran this year? Do you plan to for 2010? Leave a comment to join the discussion!

PLEASE NOTE: Hire a Hero, Hire a Vet is not in the business of providing tax or legal advice to any taxpayer. This content is for informational purposes only, and not intended or written to be used without advice of the taxpayer's independent tax advisor.

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