The Internal Revenue Service (IRS) has already released guidelines and forms to be used in claiming the recently expanded tax credit for businesses who hire veterans under the VOW to Hire Heroes Act of 2011. Of course, the IRS makes everything difficult to comprehend. Need to understand it? We’ve explained it here…in easy terminology.
What Is The VOW to Hire Heroes Act?
The enactment of the VOW to Hire Heroes Act in November last year came as great news for the hundreds of thousands of veterans struggling with unemployment and their difficult transition to civilian life. Under the act, Work Opportunity Tax Credit (WOTC) for businesses hiring eligible unemployed veterans was expanded. For the first time, credit was also made available even to some tax-exempt organizations. The act basically allows businesses to claim the WOTC for certified and qualified veterans who have started working before January 1, 2013.
Some of the fast facts: To be able to claim WOTC, employers must present the IRS with certification that the veteran has in fact served in the U.S. Armed Forces for over 180 days. Those who have been discharged before the prescribed period for a service-connected disability are also qualified. Additionally, qualified individuals must not have been on active duty for more than 90 days. Upon hiring, a certified veteran should have put in 120 hours of work first before any credit can apply.
This exciting news obviously brings relief and hope to veterans and their families but should businesses be equally happy? Definitely.
What’s In It for CFOs and Business Owners?
Businesses in Illinois are said to be hiring over 27,000 new employees through the 2011 Work Opportunity Tax Credit (WOTC). Washington meanwhile received a $56-million tax break in the same year. Clearly, businesses in various states are enjoying the tax reliefs they are getting through WOTC.
According to the IRS, the tax credit in hiring veterans can be as much as $9,600 per person for for-profit employers. For tax-exempt organizations, this figure can be as much as $6,240.
Upon the signing of the act, President Obama guaranteed, “If a business hires an unemployed veteran with a disability related to their service, I proposed doubling the tax break that we already have in place.” True to these words, the IRS reports that employers hiring those with service-related disabilities will be eligible for the maximum tax credit.
The tax cuts are great but what is most important is the bigger picture. Increase in unemployment in any sector will eventually put a strain on the already ailing economy, a problem which is bound to spill over to large and small business alike. The VOW to Hire Heroes Act is bicameral bipartisan bill, the proponents of which guarantee that investing more on the training and employment of United States veterans will not add to the nation’s economic deficit. Part of his grand plan to spur job creation, the President vows that everything in the act will be paid for and that it will be beneficial for the long haul. Whether or not the act can achieve its most ambitious goals remains to be seen. One thing though is for sure: the VOW to Hire Heroes Act of 2011 will make a difference in the lives of the veterans who can successfully land a job through this piece of legislation. The private sector now has the opportunity to contribute.