Have you employed veterans since November 22, 2011 or do you plan to employ veterans in 2012?
If so you may be entitled to a generous tax credit called the Work Opportunity Tax Credit worth up to $9,600 per veteran ($6,240 for tax exempt organizations).
Recently the IRS announced extensions for filing some of the required paper work to claim the credit. So, if you missed the original deadlines you may still be able to claim the credit.
The Work Opportunity Tax Credit is targeted at veterans who have been unemployed, are receiving assistance such as food stamps or entitled to service connected disability assistance. During your job application screening and interviews you will want to keep an eye out for veterans that have applied so that you can spot if they may qualify you for the tax credit.
To claim the credit it is vital that you start planning before you even offer a job to a veteran. Some of the paper work needs to be completed on or before the date a job offer is made. Unless you have prior experience of claiming the credit it would be sensible to get professional advice and assistance from your tax adviser at an early stage.
There is a multi-step process to claim the credit as outlined here:-
- Complete form 8850 – Pre Screening Notice, on or before date of job offer.
- Complete form 9061 – Individual Characteristics Form. This will also need supporting documentation such as discharge papers, birth certificates, benefit entitlements etc.
- Submit the forms 8850 and 9061 to your State Workforce Agency so they can certify that the veteran will qualify you for the credit. This normally needs to be submitted within 28 days of the veteran starting work. For veterans employed from November 22, 2011 to May 21, 2012 the deadline has been extended to June 19, 2012.
- Keep records of the wages you paid the veteran and hours they worked.
- When preparing your year end income tax return claim the credit on form 5884 Work Opportunity Credit and form 3800 General Business Credit. If you are a non-profit organization the credit is claimed on form 5884-C.
The process is involved and there are some strict and tight deadlines to follow to qualify for the Work Opportunity Tax Credit. However if you are employing veterans in 2012 claiming the credit could benefit your tax position considerably.
This article has given an outline of the Work Opportunity Tax Credit. There are detailed qualifying conditions and varying credit amounts for different types of veterans so obtain professional advice before claiming the credit.
For assistance with claiming the Work Opportunity Tax Credit call (480) 363-4808 to book an appointment.
Disclaimer – This article does not constitute personal tax advice to the reader and is only offering general information. You should seek professional advice for your own situation as the most appropriate tax planning depends on your personal and unique circumstances.