May is National Military Appreciation Month! There are many individual days during May to celebrate our Armed Forces, such as Loyalty Day, VE Day, Memorial Day and many others. There are many ways that the IRS is working to help veterans, and many businesses are as well. One of the more recent tax credits that businesses can take advantage of for employing Veterans is the Work Opportunity Tax Credit.
The Work Opportunity Tax Credit (WOTC) is one of the incentives that the IRS offers to employers to hire people who have experienced significant barriers towards gainful employment. Five of the available thirteen WOTC target groups are related to military veterans. Veterans who have been unemployed for 4 weeks qualify and the amount of the credit increases if they were unemployed for over 6 months. If a Veteran was entitled to compensation for a service-connected disability, the amount of the credit can be even higher with the maximum credit for one year being $9,600.
The Work Opportunity Tax Credit is not only available for Veterans but to SNAP and TANF recipients as well as Ex-Felons and people living in areas of high unemployment, to name a few. Employers receive an average credit of $2,400 for hiring a qualified employees. All firms with high turnover, especially those in big cities, should take advantage of this credit.
While there are other credits available to Veterans, the WOTC should not be overlooked. For the minimal amount of paperwork, the credit can be extremely lucrative. The minimum retention period for claiming the credit is 120 hours and the maximum credit can be realized after working 400 hours. The credit is based on a percent of first-year wages and sometimes send-year wages.
Please contact Frank Fioretti, Project Manager for PM Business Advisors for a complimentary consultation to discuss the benefits of the Work Opportunity Tax Credit and its potential impact on your tax return. Through multiple processes, we can accommodate different hiring and onboarding methods to ensure the maximum credit is obtained for you or your clients.