Thanks to the VOW to Hire Heroes Act of 2011, the opportunity to claim veteran employment as a credit on your small business taxes has been extended to January 1, 2013. You have until June 19th to file Form 8850 to get the Work Opportunity Tax Credit for eligible unemployed veterans you hired between November 22nd and May 22nd. If you hire any veterans after May 22nd, you will have 28 days from the hiring date to file the form. This is a great program for small businesses that want to help out-of-work veterans and need more employees, but are struggling financially. For-profit businesses could receive up to $9,600 per veteran and tax-exempt organizations could receive up to $6,240. This is dependent upon certain factors, such as:- How long the veteran was unemployed before your company hired him or her.
- How many hours the veteran works for you.
- How much the veteran made in first-year wages.
Filing Form 8850 doesn't automatically get you the tax credit. It is simply a request to a state workforce agency to certify that your employee as an eligible veteran. In order to claim the credit, you must file other forms. For-profit businesses must use Forms 5884 and 3800 to claim this credit. Tax exempt organizations must file a Form 5884-C.
So, who is an eligible veteran? He or she must:
- Have served more than 180 days active duty for the U.S. Armed Forces, not including training.
- Have not served on active duty for a 90-day period or longer ending within 60 days of hiring.
To qualify for the credit, the veteran must also be certified as:
- A member of a family that received food stamps for at least 3 months during the 12 months before the hiring date.
- Unemployed for at least four weeks (consecutive or not) during the 12 months before the hiring date.
- Entitled to compensation for a service-related disability, and has been unemployed for at least 6 months of the 12 months prior to the hiring date.
- Entitled to compensation for a service-related disability and hired within twelve months of being discharged or released from active-duty.
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As you can see, you can't just hire any veteran and get $9,000 from the Federal government. You need to be helping a veteran who has had a difficult time getting by financially after defending America's freedom. Even without the tax credit, I highly recommend you consider veterans first when hiring. They have earned it.
If you owe the IRS back business or payroll taxes, you can get a free, no-obligation consultation by calling 888-415-1337 or filling out the submission form.