March 13. 2012 | Bill Russell
A “Win-Win”: Tax Incentives Now Available to Not-For-Profits Hiring Unemployed Heroes and Wounded Warriors
According to a United States Department of Labor unemployment report, there were nearly 900,000 unemployed veterans in the United States as of October 2011, and the average overall unemployment rate was 12.1% for veterans returning home from Iraq and Afghanistan. In order to restore confidence and pride to Veterans transitioning back home, tax incentives were introduced in 2011 to offer employers larger tax benefits for hiring unemployed veterans. The new benefits offered are part of the Veterans Opportunity to Work (VOW) to Hire Heroes Act of 2011 in conjunction with the Work Opportunity Tax Credit (WOTC). In January 2012, the IRS announced that tax-exempt organizations are now allowed to benefit from the WOTC (IRS Notice 2012-13).
As with any governmental program, there is some paperwork involved, albeit minor compared to the benefits derived for the employer and for the veteran being hired. A brief recap follows:
Before any tax credits can be determined, employers are required to submit a certification request by filing Form 8850 with the state employment security agency or Designated Local Agency (DLA) by June 19, 2012, for veterans hired between November 22, 2011 and May 22, 2012, and, for veterans hired thereafter, within 28 days after the veteran’s date of hire. The DLA will then certify and authorize a qualified veteran to be included in the WOTC calculation.
Tax credits ranging from 16% to 26% are available for hiring unemployed veterans, depending on the length of unemployment prior to being hired, hours worked during the year, and any related service disabilities. As with most tax credits, certain limitations apply. For-profit entities have a maximum allowable credit limitation of $9,600 per qualified veteran and tax-exempt entities have a limitation of $6,240. There is also a distinction on how the tax credits are applied. For-profit entities apply the credit as a general business credit on Form 3800, while tax-exempt entities apply the credit against the employer’s portion of the social security tax liability as determined on their respective 941 employment tax returns.
Not-For-Profits have a history of serving the community, and now have an additional incentive for hiring those who have served not just their community, but also their country. Please contact us for more information on the Act.
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