Why you should consider hiring veterans
On Nov. 21, 2011, President Barack Obama signed a bill designed to help veterans go back to work. The bill, which was part of the American Jobs Act, will give tax credits to employers who hire veterans. Here's how it works.
The "Returning Heroes" tax credit will be provided to employers who hire veterans unemployed either short-term (four weeks to six months) or long-term (more than six months). If you hire a short-term-unemployed veteran, you'll receive a tax credit equal to 40 percent of the employee's first $6,000 in wages (up to $2,400). If you hire a long-term-jobless veteran, you receive back 40 percent of the first $14,000 you pay in wages (up to $5,600).
The "Wounded Warriors" tax credit doubles the credit for long-term-unemployed veterans with service-related disabilities. First, it maintains the existing Work Opportunity tax credit (currently up to $4,800) and provides a new credit of 40 percent of the first $24,000 of wages (up to $9,600).The catch? A veteran must work at your practice for more than six months for you to receive these benefits, and you need to jump through a few additional hoops. First off, the credits are available only if a designated local agency—a state unemployment security agency—makes a credit certification available.
This means you need to work with the potential employee and the local agency to get the required paperwork in place before you hire the employee. Also, upon hiring you must complete a pre-screening notice and fill out and submit IRS Form 8850 to the state unemployment office. The credits apply only for veterans hired after the date the bill was enacted (Nov. 21, 2011), and it's in effect until Dec. 31, 2012.
If you qualify for the credit, you'll receive a dollar-for-dollar offset against the taxes you owe. But remember the tax credit must reduce your veterinary practice wage expense before computing taxes due. You can use the IRS form 5884 to claim the tax credit.
There's nothing better than tax credits to reduce the amount you owe, but this one requires some bureaucratic maneuvering. It's always a good idea to work with your tax advisor to make sure you meet all the technical requirements.
Gary Glassman, CPA, a Veterinary Economics Editorial Advisory Board member, is partner with Burzenski & Co. PC in East Haven, Conn.