PHOENIX, Ariz. – The Internal Revenue Service has a $9,600 credit available for employers who hire a veteran before Dec. 31.
The Veterans Opportunity to Work Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit, adding two new categories to the existing qualified veteran target group and making the credit available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act will allow employers to claim the credit for qualified veterans who begin work before Jan. 1, 2013.
The credit can be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for tax-exempt organizations, but the amount will also depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works and the veteran’s first-year wages. The amount for tax-exempt organizations may not exceed the organization’s employer social security tax for the period for which the credit is claimed.
Pre-screening and certification
All employers must obtain certification that an individual is a member of the target group before the employer can claim the credit. The process for certifying veterans is the same for all employers.
An employer must file Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit with their respective state workforce agency within 28 days after the veteran begins work. Notice 2012-13 provides additional guidance on submission of Form 8850.
Claiming the credit
After the required certification is secured, for-profit employers claim the tax credit as a general business credit against their income tax. For additional information, see Form 5884 with instructions, Form 3800, instructions for Form 3800 and be sure to consult your business’s related income tax return and instructions.
Once filing the required certification, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C. Tax-exempt employers should also see IRS Notice 2012-13 and the IRS Frequent Asked Questions and Answers for more details on claiming the credit. It is recommended that tax-exempt employers do not reduce their required deposits in anticipation of any credit, as the forms are processed separately.
Submitted by: IRS Media Relations