The IRS recommends hiring veterans before the new year for big tax breaks under the WOTC.
A recent segment on NPR revealed many veterans are hurting for employment. While this problem is not novel, with the wars in Iraq and Afghanistan winding down and troops finally returning home, the issue is real now more than ever.
Thankfully, the IRS is taking steps to employ veterans via the Work Opportunity Tax Credit. Available to employers who hire qualified veterans before the new year, the credit is worth thousands of dollars.
According to the IRS, there are six key facts useful to employers pertaining to the WOTC. They are:
1. 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.
2. 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.
3. Credit Factors: The credit amount depends on a number of actors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of wages paid during the first year of employment.
4. Disabled Veterans. Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.
5. 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 more information, visit the U.S. Department of Labor’s WOTC website.
6. E-file. Some states accept from 8850 electronically.
For more information, please visit IRS.gov and type “WOTC” in the search box.
Source: IRS Tax Tips
Thank you for taking the time to read our blog! Best of luck to you in the upcoming tax season.