Federal Tax Credits for Hiring Veterans

Receive a Tax Credit of up to $9600 for Every Eligible Veteran Hired

How can your organization claim a tax credit for hiring veterans?

On December 19, 2014, President Obama signed into law the Tax Increase Prevention Act of 2014, which provides for the temporary extension of more than 50 tax breaks, most of which expired at the end of 2013. The bill is retroactive and covers the entire 2014 tax year. Included in these extenders is an extension of the Work Opportunity Tax Credit (WOTC) tax credit, which expired on December 31, 2013. WOTC is now retroactively in place through 2014, for eligible veteran employees who begin work before January 1, 2015.

WOTC contains provisions for both the Returning Heroes Tax Credit, which provides incentives of up to $5,600 for hiring qualified unemployed veterans, and the Wounded Warriors Tax Credit, which provides credit for long-term unemployed veterans with service-connected disabilities to up to $9,600.

Who is an eligible veteran?

Returning Heroes Tax Credit

  • Short-term Unemployed: A credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for at least 4 weeks.
  • Long-term Unemployed: A credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for longer than 6 months.

Wounded Warrior Tax Credit

  • Veterans with Services-Connected Disabilities: Veterans with service-connected disabilities hired within one year of being discharged from the military. The credit is 40% of the first $12,000 of wages (up to $4,800).
  • Long-Term Unemployed Veterans with Services-Connected Disabilities: A credit of 40% of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been in receipt of unemployment insurance or compensation for longer than 6 months.

How to file for these credits?

You must submit IRS Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and ETA Form 9061 or 9062, Individual Characteristics Form (ICF) Work Opportunity Tax Credit, to the WOTC Coordinator within your State Workforce Agency (do not mail to the IRS) within 28 days from when the veteran begins work. You must then wait for a final determination from your State Workforce Agency that will indicate whether the employee is certified as meeting the eligibility for one of the WOTC target groups. After the target group employee is certified by the State Workforce Agency, file for the tax credit with the Internal Revenue Service.

PLEASE NOTE: Orion ICS, LLC, its affiliates and its employees are not in the business of providing tax or legal advice to any taxpayer. This content is for general information purposes only, and is not intended or written to be used without the advice of the taxpayer's independent tax advisor. Thank you for reading about tax credits for hiring veterans.