Hire a vet before end of year and get a tax credit
Any business that plans to hire someone soon should consider hiring a veteran. If they do, the business may be able to claim the federal Work Opportunity Tax Credit (WOTC) that is worth thousands of dollars.
But the business must act soon because the WOTC is available to employers that hire qualified veterans before the new year.
Deadlines and details
Here are six key facts about the 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 for one 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 information go to the U.S. Department of Labor’s WOTC website.
E-file: Some states accept Form 8850 electronically.
To learn more about this topic, visit irs.gov and enter “WOTC” in the Search box.