Tax Credits for Hiring Veterans: How to Qualify

Veterans saluting American Flag

With an estimated 19 million US veterans, the United States strives to help its Armed Forces veterans find gainful employment once they are discharged. To do this, the federal government offers significant tax credits to companies that employ military veterans.

To qualify for these credits, a business needs to jump through a few hoops fairly quickly to qualify for these tax credits. We’ll walk you through how to be eligible for tax credits for hiring veterans and how to apply for these tax credits with your local State Workforce Agency.

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Do Companies Get Tax Breaks for Hiring Veterans?

Yes. A few tax credits for hiring veterans are worth applying for with the IRS. You’ll need first to verify that the veteran you hired qualifies for the tax credit, and then you’ll need to submit the necessary documentation to claim the credits.

These veteran tax credits range from $2,400 to $9,600 in savings per veteran employee. If you regularly hire veterans, this can be a significant tax break worth doing the paperwork.

Tax Credits for Hiring Veterans within the Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit (WOTC) is the umbrella federal tax credit designed to help specific groups of Americans facing significant employment barriers. While the WOTC helps several different targeted groups, it has a few tax credits specifically designed for veterans.

Who Qualifies as a WOTC Veteran?

To qualify as a veteran for WOTC tax credits, the veteran hired must be at least one of the following:

  • A member of a family receiving the Supplemental Nutrition Assistance Program (SNAP) for at least three consecutive months within fifteen months of being hired.
  • Unemployed for at least four weeks (does not need to be consecutive) within six months before their hire date.
  • Unemployed for six months (does not need to be consecutive) within a year before their hire date.
  • Eligible for compensation for a service-connected disability and hired within a year of active duty discharge from the US Armed Forces.
  • Eligible for compensation for a service-connected disability and unemployed for at least six months within one year before their hire date.

If you have a new hire that is a qualifying veteran, you’ll want to submit your IRS forms within 28 calendar days of the new hire’s start date.

Want help identifying all the tax incentives your business could qualify for? Contact us for assistance.

Related Link: How R&D Credits Help with Payroll Taxes [2023]

A hired veteran with disabilities working with his team

The Returning Heroes Tax Credit

There are two tax credit opportunities under the Returning Heroes Tax Credit to help unemployed veterans:

Short-Term Unemployed

This tax credit offers 40% of the first $6,000 of the veteran’s wages, up to $2,400. To qualify for this tax break, employers must hire veterans with at least four weeks of unemployment.

Long-Term Unemployed

This tax credit offers 40% of the first $14,000 of the veteran’s wages, up to $5,600. These veterans must have six months or longer of unemployment.

Wounded Warriors Tax Credit

There are two tax credit opportunities under the Wounded Warriors Tax Credit that rewards companies for employing veterans with service-connected disabilities:

Veterans with Services-Connected Disabilities

This tax credit offers 40% of the first $12,000 of the veteran’s wages, up to $4,800. To qualify for this tax credit, you need to hire a veteran with service-connected disabilities within one year of military discharge.

Long-Term Unemployed Veterans with Services-Connected Disabilities

This newer tax credit offers 40% of the first $24,000 of the veteran’s wages, up to $9,600, for for-profit employers. Tax-exempt employers can receive up to $6,240. This is the maximum tax credit allowed under the WOTC. To qualify for this tax credit, the employer must hire veterans with service-connected disabilities who have received unemployment compensation for over six months.

Need help filing your WOTC forms for tax credits for hiring veterans? Contact us for a free consultation.

Related Link: IRC Section 174: Get Lower Tax Bill for Inventors

How to Apply for the WOTC Veteran Tax Credits

If you’re looking to hire veterans, you can contact your State Workforce Agency (SWA) to connect with the Veteran Administration offices. Once you’ve hired a qualifying veteran, there are a few steps in the WOTC certifications process that both for-profit and tax-exempt companies must follow:

  1. Submit IRS Form 8850 to your SWA within 28 calendar days from the hire start date. The IRS FORM 8850 is a pre-screening notice and certification request form that enables the SWA to certify your new hire is a qualified veteran.
  2. Submit ETA Form 9061 or 9062 with the IRS formForm 9061 is needed if you aren’t working with a partnering agency. You’ll need Form 9062 if you use a partnering agency. The partnering agency will often give you this form.

Once your new hire has been certified, your business will receive ETA Form 9063 from your SWA. The WOTC credit can be used against your income taxes for for-profit companies. And tax-exempt organizations can use the WOTC credit against their payroll taxes.

Veterans are skilled employees

Hiring Veterans is a Smart Choice

Not only do you get valuable skilled employees, but you get an additional tax break that can help your business, enabling you to reinvest more back into your business. The key to leveraging a WOTC tax credit is to submit the correct forms to your SWA within 28 calendar days of the hire date.

If you’re worried you might submit something wrong, feel free to reach out to our expert team to help you qualify for all available tax breaks. We offer a free consultation and can ensure rapid results for a maximum tax break.

TaxRobot has a team of experienced accountants that can help you navigate the intricacies of filing for WOTC tax credits and other tax breaks. You may also be interested in our intuitive software that automates and assesses areas where you can improve your business’s efficiency and optimize your tax return.

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