The benefits of hiring a military veteran seem obvious—veterans generally are loyal, honest, hard-working and well-trained leaders (the list goes on). But did you know that hiring a veteran can make your business eligible for tax incentives?
The Work Opportunity Tax Credit, (WOTC), Returning Heroes Tax Credit and the Wounded Warriors Tax Credit, among other programs, provide incentives to businesses for hiring eligible veterans who have service-related disabilities or have been unemployed for a specified period.
In 2017, there were 20.4 million veterans in the United States, accounting for about 8 percent of the civilian non-institutional population age 18 and over, according to the U.S. Bureau of Labor Statistics. The unemployment rate for veterans who served on active duty in the U.S. Armed Forces at any time since September 2001—a group referred to as Gulf War-era II veterans—was 4.5 percent and the jobless rate for all veterans was 3.7 percent in 2017. About 41 percent of Gulf War-era II veterans had a service-connected disability in August 2017, compared with 24 percent of all veterans, according to the Bureau.
Tax-friendly incentives to hire a veteran
The WOTC may be earned by employers who hire unemployed veterans, with benefits ranging from $1,200 to $9,600, depending on the veteran’s status, according to the U.S. Department of Veteran’s Affairs (VA). The tax credit reduces an employer’s tax bill dollar-for-dollar, so each $1 of WOTC saves $1 in taxes and the credit is limited to the amount of the business income tax liability or social security tax owed.
The incentives vary according to the length of time the veteran has been unemployed and an employer must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. There is no limit on the number of eligible employees that can be hired to obtain the credit.
The Returning Heroes Tax Credit provides incentives of up to $5,600 for hiring veterans who have been unemployed longer than six months and $2,400 for hiring veterans who have been unemployed at least four weeks. To be eligible, employers have 28 days from the employee’s start date to complete and submit the appropriate forms, and the veteran must provide proof of unemployment.
Under the Wounded Warrior Tax Credit, businesses that hire veterans with service-connected disabilities within one year of being discharged from the military are eligible to receive up to $4,800, while hiring veterans with service-connected disabilities who have been in receipt of unemployment insurance or compensation for longer than six months could result in up to $9,600 for businesses. Employees must work for at least 120 days for their wages to be creditable.
Businesses can also reap tax credit under the VA’s Vocational Rehabilitation and Employment (VR&E) program, which provides eligible veterans the opportunity to obtain training and practical hands-on experience through its Special Employer Incentives (SEI) program.
Employers are eligible to receive reimbursement of up to 50 percent of a veteran’s salary during the SEI program, which typically lasts up to six months. The VA also provides tools, equipment, uniforms and other supplies; appropriate workplace accommodations based on individual needs of the veteran; and support during training and the placement to assist with veteran work or training-related needs.
Hiring activated military reservists provides employers yet another way to obtain tax credit. The Activated Military Reservist Credit provides employers with a credit of up to $4,000 for each employee who is a National Guard member or reservist, and to whom the employer pays wages while the service member is away from work on active duty.
It is available to employers for payments to any employee who has been employed for more than 90 days prior to being called to active duty, who serves in the Reserves or National Guard, and who is called up to active duty “in the uniformed services” for more than 30 days.
To find out more about how your business can benefit from hiring a military veteran or reservist, contact a Tully Rinckey PLLC attorney at (888) 529-4543.
Anthony J. Kuhn, Esq. is the Managing Partner of Tully Rinckey PLLC’s Buffalo office. A First Sergeant in the United States Army Reserve and a combat veteran, Mr. Kuhn focuses much of his time on the representation of military personnel, federal employees and federal agents, as well as private employers and not-for-profit corporations.