New Tax Incentives for Hiring Unemployed Veterans
President Obama recently signed the VOW to Hire Heroes Act, which offers tax incentives to employers for hiring unemployed veterans. The new law was enacted on November 21, 2011, and was effective immediately.
Under the new law, when an employer hires a veteran who has been out of work for at least four weeks, but less than six months, the employer can qualify for a $2,400.00 tax credit. If the veteran has been out of work for six months or more, the tax credit jumps to $5,600.00. If an employer hires a veteran with a service-connected disability who has been out of work for at least six months, the employer may qualify for a $9,600.00 tax credit. The length of the veteran’s unemployment is determined on an aggregate basis looking back one year prior to the date of hire. That means that it is not necessary for the veteran’s period of unemployment to immediately precede the hire date. Employers are permitted to look back one year from the hire date to determine if the combined total amount of time the veteran was unemployed qualifies for the tax credit.
Unfortunately, the Act leaves out important details, such as when the tax incentive period expires and how employers can claim the credit. The IRS is expected to fill in those gaps by offering guidance to employers seeking to take advantage of this incentive. We will keep you informed as developments occur.