This is a follow-up to my recent post about tax benefits employers earn by hiring military veterans. In addition to strong skill sets and personal characteristics, many veterans can bring an added financial benefit to their employer through the Work Opportunity Tax Credit (or WOTC).
Employers naturally have questions about how veterans qualify. How long must a veteran have served? What if they have a service-connected disability? What are the specific tax credit amounts? Today, I’ll go into these details.
If you’re a business owner, CPA or hiring executive, this is for you. Everyone knows that hiring veterans is both the right thing and the smart thing to do for many reasons.
Military veterans bring a unique set of skills to the civilian labor market. Few organizations like the military can teach, enforce and reward the characteristics of teamwork, initiative, leadership, organization and mission.
The military is also a highly diverse and talented group of people. As a result, veterans have deep experience working well with others. That experience instills respect and the ability to adapt and excel in a wide variety of circumstances. (more…)
House Resolution 5845 was introduced by Congressman Ted Poe of Texas and referred to the House Ways and Means Committee last Friday (on May 18th). As of this afternoon, the actual text of the bill is not yet available. The title, however, is listed as
H.R.5845 – To amend the Internal Revenue Code of 1986 to extend the work opportunity tax credit for veterans and to allow an exemption from an employer’s employment taxes in an amount equivalent to the value of such credit.
Catching up with the VOW to Hire Heroes Act, which was signed by President Obama in November of last year, the Internal Revenue Service has issued an updated Form 8850 and some very important guidance.
Disconnected Youth: Although not unexpected, I should note that in preparing the updated IRS 8850 Pre-screening Notice, the IRS has removed the questions related to qualifying Disconnected Youth. This category expired on December 31, 2010.
We’ve been clinging to the hope that it would be added-back with the extension of WOTC. I personally have not given up on that hope. Also, if I am not mistaken, the Department of Labor’s current instructions to State Workforce Agencies still requires them to reserve disconnected youth applications on file pending future instructions.
Notice 2012-13: Notice 2012-13 provides guidance on a number of important issues and should not be overlooked. I suggest a thorough reading. Major topics covered include:
- Background of the new veterans categories
- Transition relief (a grace period extending the 28-day submission deadline for IRS 8850 for qualified veterans hired between November 22, 2011 and May 22, 2012)
- The use of electronic signatures for IRS 8850
- Signing or filing IRS 8850 by FAX transmission
- Guidance for tax-exempt organizations claiming WOTC
Request for Comments: In addition to the guidance provided by the IRS on these topics, the IRS is also requesting comments about (1) alternative methods for certification of qualified veterans and (2)alternative methods of filing Form 8850.
In summary, with this notice the IRS has given us a lot to think about and a lot of work to do.
The following instructions are copied directly from the document recently published by the US Department of Labor.
Vow to Hire Heroes Act – Work Opportunity Tax Credit Provisions: Interim Instructions for State Workforce Agencies and Employers
On November 21, 2011, the President signed into law the “Vow to Hire Heroes Act”, which amends and expands the definition of Veteran target groups for the Work Opportunity Tax Credit (WOTC). These provisions became effective the day after the President signed the Act into law (November 22, 2011). (more…)
Thank you to Rik Moore of the National Telecommuting Institute, Inc. for bringing this to my attention early last week.
The US Department of Labor has offered new guidance bringing into focus the WOTC provisions of the recently passed Vow to Hire Heroes Act of 2011. A summary of WOTC-related provisions from the act has been published on the Department of Labor’s website. The following is copied directly from that document. Please download the entire document in order to see footnotes and introductory content not included here. (more…)
The VOW to Hire Heroes Act was signed today by President Obama. (see Business Week article from today.) As previously mentioned, this bill expands the eligible-veterans categories under the Work Opportunity Tax Credit (WOTC) program and extends the new categories through December 31, 2012. Unless the legislative language was modified prior to final passage, my understanding is that the new WOTC categories will become effective immediately. (more…)