In November, President Barak Obama signed into law the Three Percent Withholding Repeal and Job Creation Act. A part of this sweeping legislation provides incentives to employers for hiring veterans.
The new legislation is an enhancement of the Work Opportunity Tax Credit ("WOTC"), which will sunset at the end of 2011. The WOTC was designed to spur employers to hire individuals from targeted groups that have a high unemployment rate, including qualifying veterans.
For veterans, the new legislation takes the place of the WOTC by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit. Employers that hire veterans who have been looking for employment for more than six months may be eligible for a Returning Heroes Tax Credit of up to $5,600.00 per employee. Employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400.00 per employee. Under the Wounded Warriors Tax Credit, employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a $9,600.00 credit per employee.
Both of the credits apply to individuals who begin work for the employer after November 21, 2011, and the credits are scheduled to expire after December 31, 2012. Additionally, both credits are applicable to tax-exempt employers. Some of the calculations and qualification criteria related to the credits are sophisticated, so I suggest that you confer with a tax professional if your business is planning on utilizing one or both of them.