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April 24, 2014

Employers Hiring Qualified Veterans Before the End of the Year May Be Eligible For Expanded Tax Credit

Employers who act now may be able to claim an expanded tax credit for hiring certain qualified veterans.  According to the IRS, both for-profit and tax-exempt employers may qualify to receive thousands of dollars through the expanded Work Opportunity Tax Credit (WOTC) should they hire qualified veterans who begin work before January 1, 2013. 

The VOW to Hire Heroes Act of 2011 amended the WOTC and made significant changes, which included adding two new categories to the existing qualified veteran targeted group and making the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax.  The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013.

To be considered a veteran for purposes of the credit, the employee must: (1) have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability, and (2) not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date.  There are additional qualifications that the veteran must meet for the employer to claim the tax credit.

The credit can be as much as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations.  The specific amount of the credit will depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages.

To claim the credit, for-profit employers must first obtain certification that the employee is a qualified veteran.  After the veteran is certified by the appropriate State Workforce Agency, the for-profit employer will use Form 5884 and Form 3800 to claim the credit when filing its business income tax return.

For details on how to claim the tax credit, visit the IRS on the web here.

© 2014 Poyner Spruill LLP. All rights reserved.

About the Author

Danielle Barbour Wilson associate attorney poyner spruill law firm
Associate

Danielle’s practice is focused in the areas of Litigation and Employment Law. She represents employers in a wide range of employment and labor issues. She also assists with commercial and general litigation matters.

Representative Experience

  • Defends charges against employers filed with federal and state agencies including the Equal Employment Opportunity Commission and the North Carolina Department of Labor
  • Advises employers regarding compliance with the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Fair Labor...
919-783-2982

About the Author

David L. Woodard, Employment Litigation Attorney, Poyner Spruill, Law firm
Partner

David practices in the area of employment litigation.  He regularly advises and defends clients in race, age, disability and sex discrimination and harassment cases; reviews handbooks and termination issues; and provides compliance advice on matters of employment law.

Representative Experience

McNeil v. Scotland County - Obtained summary judgment for employer where plaintiff alleged race discrimination and retaliation in violation of Title VII of the Civil Rights Act as well as violation of the Americans with Disabilities Act. Successfully...

919-783-2854

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