New tax credit rewards businesses for hiring veterans

Uncle Sam has made it easier for businesses to hire returning veterans by providing a maximum $9,600 tax credit (to the business) for each qualified hire. The credit applies to certain veterans who have joined payrolls since Nov. 22, 2011, and to those who will be hired through Dec. 31, 2012.

This expansion of the Work Opportunity Tax Credit was contained in the VOW to Hire Heroes Act of 2011.

The credit can be as high as $9,600 per veteran for for-profit employers, or up to $6,240 for tax-exempt organizations. For tax-exempt organizations, the tax credit is offset against the employer’s share of the Social Security tax.

The amount of the credit depends on a number of factors, including:

• The length of the veteran's unemployment before hire;
• Hours a veteran works; and
• The amount of first-year wages paid.

The Internal Revenue Service has issued guidelines for employers who have hired, or plan to hire, qualified veterans, and as usual, there’s some paperwork involved.

Employers must prove that each hire qualifies under the VOW to Hire Heroes Act of 2011 by submitting a pre-screening certification form within 28 days after the individual is hired. For any hires that have occurred since the law took effect, employers may submit the form by June 19, 2012.

The form must be submitted to the state’s workforce agency, which in Massachusetts is the Department of Labor and Workforce Development.

For further details on the VOW to Hire Heroes Act of 2011, including pre-screening forms and instructions on how to claim the tax credit, read more here.