Hiring veterans is a great way to strengthen your company and community. But it's also a smart business decision: veterans bring unique skills to the workplace, and they tend to be loyal employees who are eager to learn new things. In order to help employers offset some of the costs associated with hiring new employees—especially veterans—the federal government has created tax credits that can be used as an incentive for hiring those that have served in the military. Let's take a look at what these incentives are and how they may benefit your business!
The Work Opportunity Tax Credit (WOTC) is a federal tax credit to reduce the federal tax liability of private for profit employers to be used as an incentive for employers to hire veterans.
The WOTC also assists veterans in obtaining jobs by reducing their effective income tax rate, and it provides valuable assistance to employers who hire qualified individuals from groups that have traditionally been underrepresented in the workforce.
The amount of the credit varies based on the type of work performed by each person hired. In general, the WOTC is equal to 40% of up to $6,000 of wages paid to, or incurred on behalf of, an individual who:
A 25% rate applies if the employee performs fewer than 400 but at least 120 hours of service.
The maximum tax credit is generally $2,400 per employee however, certain special circumstances may increase this limit.
The IRS defines a “qualified veteran” is a veteran who is any of the following:
Veterans looking for jobs and businesses looking to hire them can benefit from the WOTC program. It's a great tool that allows businesses to receive tax credits while hiring qualified veterans, and it encourages veterans to continue their service by providing employment opportunities.
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