San Diego has a proud military heritage and is home to the largest military and defense complex in the United States. Thousands of active-duty Navy and Marine Corps personnel are stationed here, and 250,000 more veterans call our county home. This group of veterans is a significant portion of the San Diego labor pool, and as a hiring employer, you can claim a significant tax credit if you add U.S. military veterans to your payroll before January 1, 2013.
On November 21, 2011, President Obama signed into law two federal tax credits designed to bring unemployed veterans back to work. These new tax credits were included in the American Jobs Act proposed by the President in September 2011, and they were included as work opportunity tax credits (WOTC) in the Vow to Hire Heroes Act of 2011. The act also expands the definition of “qualified veteran,” increases the maximum amount of allowable WOTC, and extends the availability of the credit to tax-exempt employers.
The first of these two tax credits is the Returning Heroes Tax Credit, offering a credit based on the length of time a veteran has been unemployed. A tax credit of up to $2,400 (40 percent of the first $6,000 in wages) is available when a newly-hired veteran has been unemployed for at least four weeks; a credit of up to $5,600 (40 percent of the first $14,000 in wages) is available when a newly-hired veteran has been unemployed for at least six months. This tax credit replaced the expired Recovery Act credit which had provided up to $2,400 for employers hiring a certain, more restricted class of unemployed veterans.
The second of these two tax credits in the Act is the Wounded Warrior Tax Credit, which provides a new tax credit up to $9,600 (40 percent of the first $24,000 in wages) for those employers who hire service-disabled veterans who have been unemployed for longer than six months. This credit is in addition to the existing Work Opportunity Tax Credit providing up to $4,800 for all employers who hire service-disabled veterans.
Above and beyond the type and amounts of each credit, there are three things you should know about these federal tax credits:
1) Employers may take the credits for any qualified veterans hired between November 22, 2011 and December 31, 2012, but they expire at the end of this year.
2) There is no time limit associated to when the veteran left the service.
3) Qualified tax exempt – 501 (c) – organizations may now claim a WOTC by hiring veterans.
At the state level, hiring credits are available through the California Enterprise Zone Program for hiring veterans – $37,440 or more in tax credits for each qualified employee hired earned over a five year period. The California Revenue & Taxation Code provides a state Hiring Credit for a business who employs a “qualified employee” within a designated Enterprise Zone.
While most people believe that an employee must live within an Enterprise Zone to be a “qualified employee,” this is not the case. You can claim the hiring credits even if your business is not located in an enterprise zone but your employees work in an enterprise zone.
An employee will qualify for the California Enterprise Zone hiring credit if, at the time of hire, the employee was:
-A Vietnam-era veteran who served between 8/05/1964 to 5/07/1975
-A recently separated veteran who has left the military within 48 months of their employment date
-A service-connected disabled veteran
-There is no limit to the number of veterans you can hire and still claim these federal and state tax credits.
By Brendan Foote and Matt Brogdon
Brendan Foote is senior vice president of Tax Credit Services at Hughes Marino, the largest San Diego commercial real estate company with brokers exclusively specializing in tenant representation for lease negotiations and building purchases. (619) 238-2111. Email: email@example.com.
Matt Brogdon is the President of The Pathfinder Group. The Pathfinder Group is a San Diego-based national recruiting consulting firm and the leading advisor on military marketing and recruiting strategy. They partner with clients in all sectors and regions to identify their military outreach and recruiting needs, address their most critical challenges, and transform their businesses with veteran talent.
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