As a small business owner, you are likely always looking for a way to minimize your tax obligation and maximize your productivity. Hiring a veteran may be a way to accomplish both of those goals at one time.
The Internal Revenue Service, or IRS, offers employers a credit when they hire an unemployed veteran under the Work Opportunity Tax Credit, or WOTC, program. A for-profit company can earn up to a $9,600 credit while a not-for-profit can earn up to a $6,240 credit. The amount of the credit depends on a number of factors including the length of time that the veteran was unemployed prior to being hired, the number of hours the veteran works during the first year of employment and the wages paid to the veteran during the first year of employment. An employer that hires a veteran who has a service-related disability may qualify for the maximum credit amount.
The credit is applied when the employer files taxes at the end of the year; however, an employer must request certification for the credit within a short time after hiring the veteran. Certification must be requested by completing IRS Form 8850 with the state workforce agency.
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