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How to Claim Federal Tax Credits for Hiring Veterans

Wednesday, May 31, 2017

Hiring veterans comes with a variety of great benefits, ranging from the leadership and technical skills veterans bring to the table to cost benefits, like relocation savings or savings on healthcare premiums. Included in this latter category are tax credits that employers can claim for hiring qualified veterans.

On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that extends and modifies the Work Opportunity Tax Credit Program (WOTC), resulting in an extension of the Returning Heroes and Wounded Warrior Credits. Both of these credits expired on December 31, 2014, but were retroactively reinstated for 2015 and extended through the end of 2019. These credits, in addition to the Differential Wage Payment Credit, offer three ways your company can claim tax credits.

Returning Heroes Tax Credit
Short-term Unemployed: A credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for at least 4 weeks or who have received assistance from a supplemental nutrition assistance program under the Food and Nutrition Act of 2008 for at least a three month period during the 15-month period ending on the hiring date
Long-term Unemployed: A credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for longer than 6 months (whether or not consecutive) in the one-year period ending on the hiring date.

Wounded Warrior Tax Credit
Veterans with Services-Connected Disabilities: Veterans with service-connected disabilities hired within one year of being discharged from the military. The credit is 40% of the first $12,000 of wages (up to $4,800).
Long-Term Unemployed Veterans with Services-Connected Disabilities: A credit of 40% of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been in receipt of unemployment insurance or compensation for longer than 6 months.

Differential Wage Payment Credit
A credit of up to $4,000 for employers who pay Reserve and National Guard employees while they are away on active duty for more than 30 days and have been employed for more than 90 days. Formerly available only to small businesses in 2015, it is now permanently available to all employers.

How to file:

Forms must be filed within 28 days for those hired after May 31, 2016. Below is a list of the forms needed to file for each of these credits:

Returning Heroes
IRS Form 8850
ETA 9061 or 9062
IRS Form 5884 (or 5884-C for tax-exempts)

Wounded Warrior
IRS Form 8850
ETA 9061 or 9062
IRS Form 5884 (or 5884-C for tax-exempts)

Differential Wage Payment
IRS Form 8932

Many states also offer tax credits for hiring veterans. For example, Alabama has the Heroes for Hire Income Tax Credit, which provides a $1,000 tax credit for job creation to employers who hire recently deployed, now discharged, unemployed veterans.  See if your state offers a tax credit for hiring veterans

PLEASE NOTE: Orion Talent, its affiliates and its employees are not in the business of providing tax or legal advice to any taxpayer. This content is for general information purposes only, and is not intended or written to be used without the advice of the taxpayer's independent tax advisor. Thank you for reading about tax credits for hiring veterans.

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This is Tim Testing.

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