Tax Credit Services

WOTC Tax Credits

Veterans make excellent employees. They are mission focused and possess desirable characteristics, such as leadership, loyalty, and responsibility. The Federal government has determined that there are people within certain groups that have particular barriers to the workforce and Veterans are among those groups. To assist people in these group, tax credits were developed to incentivize employers to hire them. Tax credits are DOLLAR for DOLLAR reductions which make them very valuable to a company’s bottom line. So, what veterans qualify and what does that mean to a company’s financial position?

Which veterans qualify?

As a small business owner, you qualify for the work opportunity tax credit (WOTC) if you hire a veteran who falls into any of the following categories:

  • Having a service-related disability
  • Unemployed for a specified period
  • Receiving SNAP (food stamp) benefits
  • Even if a veteran does not fall within any of these categories, they may still be a member of another group and thus qualify.

How much of a credit can we receive?

The credit is based on the amount of wages paid to an eligible veteran in the first year of employment. The maximum tax credit is based on a set percentage of first-year wages. For veterans, the basic percentage of first-year wages is 25% for those who worked at least 120 hours but fewer than 400 hours; it is 40% for those who worked at least 400 hours.

The maximum credit for a veteran working at least 400 hours is:

  • Service-related disability and unemployed at least 6 months in the year ending in the hiring year: $9,600 ($24,000 in wages x 40%).
  • Service-related disability and hired within 1 year of discharge or release from active duty: $4,800 ($12,000 in wages x 40%)
  • Unemployed at least 6 months: $5,600 ($14,000 in wages x 40%)
  • Unemployed at least 4 weeks: $2,400 ($6,000 in wages x 40%)
  • Receiving SNAP benefits: $2,400 ($6,000 in wages x 40%)
  • Additionally, there is no limit on the number of eligible employees you can hire for the credit.
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