In addition to the skills and talents Military Veterans can bring to a company, did you know that they can also help your business earn tax credits?
Businesses that hire eligible unemployed Military Veterans can take advantage of a Work Opportunity Tax Credit (WOTC), available to privately-held, publicly-held, and certain tax-exempt organizations.
After recent changes, The Returning Heroes Tax Credit now provides incentives of up to $5,600 for hiring unemployed veterans, and the Wounded Warriors Tax Credit doubles the existing Work Opportunity Tax Credit for long-term unemployed veterans with service-connected disabilities, to up to $9,600.
Here are the various Military Veteran-related tax credits your company could qualify for:
Unemployment Tax Credits:
- Qualified Long-term Unemployment: This is a credit for new hires that begin work on or after January 1, 2016 through December 31, 2019, during which the individual is employed no less than 27 consecutive weeks and includes a period in which the individual was receiving unemployment compensation under State or Federal law. For WOTC-certified new hires working at least 120 hours, employers can claim 25% of the first-year wages paid up to $6,000, for a maximum income tax credit of up to $1,500. For WOTC-certified new hires working 400 hours or more, employers can claim 40% of the first-year wages up to $6,000, for a maximum income tax credit of up to $2,400.
- Short-term Unemployment: A credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment compensation for at least 4 weeks.
- Long-term Unemployment: A credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment compensation for longer than 6 months.
Wounded Warrior Tax Credits:
- Veterans with Services-Connected Disabilities: Maintains the existing Work Opportunity Tax Credit for veterans with service-connected disabilities hired within one year of being discharged from the military. The credit is 40% of the first $12,000 of wages (up to $4,800).
- Long-Term Unemployed Veterans with Services-Connected Disabilities: A new credit of 40% of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been in receipt of unemployment compensation for longer than 6 months. The credit can be as high as $9,600 per veteran for for-profit employers or up to $6,240 for tax-exempt organizations.
- Certain tax-exempt organizations can take advantage of WOTC by hiring eligible veterans and receiving a credit against the employer’s share of Social Security taxes.
Regardless of the Military Veterans you hire, your company will benefit, financially in productivity and engagement as well as these great tax credits.