Financial Benefits for Hiring Veterans: Tax Credits
In many ways, it pays to hire veterans. Not only are they a dedicated, skilled, versatile, and resilient workforce, many employers are also eligible tax credits for hiring them. 
June 18, 2020

In many ways, it pays to hire veterans. Not only are they a dedicated, skilled, versatile, and resilient workforce, many employers are also eligible to claim tax credits for hiring them. 

 

The IRS Work Opportunity Tax Credit (WOTC) program provides options for tax breaks that can save employers thousands of dollars per year. The program was created to help those who have had historic difficulties with being hired. Although military veterans provide an excellent talent pool for employers, at various points in history the veteran unemployment rate has been higher than average.

 

In recent years, the unemployment rate has dropped (3.0% for males in 2019 and 3.7% for females), yet many veterans still face unique difficulties with obtaining quality employment after leaving the military.

 

Also, in 2020, data suggests that the average veteran unemployment rate will likely end up being higher than last year’s. In April of 2020, the veteran unemployment rate was 11.8%, up from 3.8% in the prior month. As a result, the Work Opportunity Tax Credit program has been extended to the end of 2020 at minimum.

 

How much can employers save?

Employers can save up to $9,600 for each eligible veteran hire. The specific amount (clarified below) depends on the new hire’s qualifying WOTC group.

 

The tax credit is a percentage of the employee’s wages and each qualifying employee is required to work a minimum of 120 hours in order for the employer to qualify for the credit.

 

Which veterans are eligible for the WOTC?

Not every military veteran hire will make an employer eligible for the WOTC.

However, a range of different circumstances are covered under this program. With recent unemployment rates increasing recently, there may be higher numbers of veterans who fall into these eligible WOTC groups:

 

Veteran Groups Maximum Tax Credit
Veterans with a service-related disability and who also have been unemployed for at least 6 months in the past year. $9,600
Veterans who have been unemployed for a minimum of 6 months. $5,600
Veterans with a service-related disability and who are hired within 1 year of their discharge or release date. $4,800
Veterans who are receiving Supplemental Nutrition Assistance Program benefits (SNAP) $2,400

Veterans who have been unemployed for at least 4 weeks but less than 6 months

When and how to claim the WOTC

Employers are able to claim the credit against federal taxable income for the year that the credit is awarded, not the year that the employee is hired.

The tax credit is non-refundable, therefore the employer must have a tax liability to use the credit for. An unused credit can be carried back up to 1 year and carried forward up to 20 years.

To qualify for the credit, the employee must complete IRS form 8850 before starting the position and it must be postmarked within 28 days of the employee’s start date.

Interested in hiring veterans?

If you are interested in hiring veterans and want to ensure that you optimally leverage the WOTC program , TangoAlpha3 can assist you. From contact centers to data centers, we can help you build teams composed of veterans that developed relevant experience in the military. Moreover, if needed, we have partners whose core business is helping customers maximize the multifaceted benefits of WOTC.

If you are interested in the potential tax savings of the WOTC and would like to learn more, contact TangoAlpha3 today to schedule a meeting!

Whether you are a veteran looking for your next job opportunity or an organization looking to hire highly skilled talent, we’re here to assist. Please do not hesitate to reach out:

→ For Veterans Seeking the Ideal Job Opportunities

→ For Organizations Looking to Hire Top Veteran Talent

How to Source, Place, and Retain the Best Military Veteran Talent

Learn More

Many organizations have the productive intentions of bringing on military veteran talent to enjoy the numerous benefits that skilled veterans provide. Yet, without adequate preparation, even the best intentions frequently fall short.

Learn why it’s essential to have a framework to source, place and retain top military talent in this whitepaper

Are you Staffing Complex Projects?

Learn More

Military veterans represent a valuable pool of talent for employers, including several in the IT industry where drastic shortages remain.

Download our LCR white paper.  Understand how we develop your pipeline, approach complex projects, and why veterans are such a critical component of our methodology.

Transitioning Veterans to the Commercial Sector

Learn More

The Valuable Skills and Tax Incentives Veterans Offer Employers During a Challenging Climate

This whitepaper highlights the specific benefits of a veteran workforce including the ability to fill very complex or challenging positions, the unique soft and hard skills, and the vast expertise and background that military veterans have to offer in a challenging economic climate.

Subscribe to the TA3 Newsletter

Keep a pulse on where veteran recruitment is heading and how to make sure you’re not missing out. Join the TA3 newsletter mailing list to keep up with all things TangoAlpha3 including industry insights, company news, tips and tricks on how to recruit veterans, spotlights of our current veteran workforce, and more.