Businesses Must Act Quickly to Receive VOW Act Tax Breaks
Businesses that want to take advantage of a new law that provides tax breaks for hiring unemployed veterans or jobless veterans with disabilities must act fast to apply to get thousands of dollars in benefits. Companies have just 28 days after the hire to apply for benefits under the VOW to Hire Heroes Act, which President Barack Obama signed into law on November 21, 2011.
The application process can be complicated for large companies that operate across a wide region and that have to verify the employment status of a veteran in each state, experts said.
The Obama administration and Congress worked together on the legislation to extend and expand tax benefits to companies that hire veterans, especially veterans who served in Iraq and Afghanistan.
The jobless rate for all veterans fell to 7.5 percent in January 2012, down sharply from 9.9 percent the previous year and below the national average of 8.3 percent, according to data from the Bureau of Labor Statistics (BLS). However, the unemployment rate for veterans who were on duty in Iraq and Afghanistan remained high at 9.1 percent in January 2012, BLS reported.
Veterans who served in these wars tend to be young and have less college education and corporate experience than others. This might make them unattractive to some employers that have many applicants to select from in the large post-recession labor market. However, many learn skills in the military that are valuable in the civilian world, including managing expenses for major operations, doing large-scale logistics, and providing emergency medical care to the wounded, Obama said before signing the bill into law.
The Vow to Hire Heroes Act continues the Work Opportunity Tax Credit, already in existence, for veterans with service-connected disabilities, which has a maximum of $4,800. In addition, it offers businesses a new tax credit of:
Companies that hire a veteran must submit an Internal Revenue Service Form 8850 and either a Department of Labor Employment and Training Administration Form 9061 or 9062 to their local Work Opportunity Tax Credit (WOTC) coordinator to get certification for the tax credits.
- 40 percent on the first $6,000 in wages (up to $2,400) for hiring veterans who have been unemployed at least four weeks.
- 40 percent on the first $14,000 in wages (up to $5,600) for hiring veterans who have been unemployed for longer than six months.
- 40 percent of the first $24,000 in wages (up to $9,600) for hiring veterans with service-related disabilities who have been unemployed for longer than six months.
A company can also employ a third-party company to apply for the tax benefit on their behalf.
For more information on applying for the tax credits, as well as contact information for state WOTC coordinators.
Click here to read a White House fact sheet. The IRS released guidance on how to claim the tax benefits. To read it,
Hedley Lawson, Contributing Editor
Aligned Growth Partners, LLC