09 Feb Claim IRS Tax Credit for Hiring Veterans
The VOW to Hire Heroes Act of 2011, provides an expanded Work Opportunity Tax Credit (WOTC) to businesses that hire eligible unemployed veterans and for the first time also makes the credit available to certain tax-exempt organizations. IRS Notice 2012-13, posted today on IRS.gov, and the instructions for IRS Form 8850 provide details in support of the following…
According to the IRS the credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations. The amount of the credit depends on a number of factors including:
* the length of the veteran’s unemployment before hire,
* the hours a veteran works and
* the amount of first-year wages paid.
Employers who hire veterans with service-related disabilities may be eligible for the maximum credit.
Normally, an eligible employer must file IRS Form 8850 with the state workforce agency within 28 days after the eligible worker begins work. But according to the new IRS guidance, employers have a little more time with definitive expiration.
In an effort to streamline the certification requirements, the IRS will allow the use of electronic signatures and fax when gathering the IRS Form 8850 for transmission with state work force agencies willing to work in this fashion.
Businesses claim the credit on their income tax return. The credit is first figured on IRS Form 5884 and then becomes a part of the general business credit claimed on IRS Form 3800.
This credit is also available to certain tax-exempt organizations by filing IRS Form 5884-C. The guidance released today also provides instructions and a new set of forms for tax-exempt organizations to claim the credit.