New tax incentives for hiring unemployed veterans
President Obama recently signed the VOW to Hire Heroes Act, which offers employers a new incentive for hiring unemployed veterans.
President Obama recently signed the “VOW to Hire Heroes Act,” which offers employers a new incentive for hiring unemployed veterans. 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 tax credit. If the veteran has been out of work for six months or more in the year prior to being hired, the tax credit jumps to $5,600. If hiring 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 tax credit. The length of unemployment in each case is determined on an aggregate basis looking back one year prior to the date of hire. In other words, it’s not necessary for the unemployment period to immediately precede the veteran’s hire date. Look back one year from the hire date and determine if the combined total periods of unemployment qualify under the new tax credit structure. The new law was enacted on November 21, 2011, and became effective immediately.
Tips: Unfortunately the text of the Act leaves a lot of unanswered questions, such as when the tax incentive period expires and how employers actually claim the credit. We expect the IRS will help fill in the details and offer some guidance for employers seeking to take advantage of this incentive. Vigilant will keep you informed as developments occur.