You have served your country proudly and, in return, the federal and state governments offer some tax incentives for companies to hire you.
There are some little-known, but lucrative tax breaks that companies may receive if they hire certain qualified veterans. If you let your prospective employer know about them, it may help in getting you placed.
For example, these benefits are $2,400 in Federal and $31,000 in state of California tax credits if a company hires a qualified veteran.
Tax credits are a direct, dollar-for-dollar reduction in a company's tax bill. One way to think of these credits is a reduction in the effective wage cost for an employee.
So, if at the end of the year, a company owes the government $10,000 in tax liability. By generating tax credits, it can wipe out a company's tax liability dollar-by-dollar! Also, unused credits can be carried forward to later years.
Federal Work Opportunity Tax Credit for Hiring Veterans
No matter which state a company is in, if the company hires a veteran that meets of the following three tests, the company may be eligible for up to $2,400 in federal tax credits:
- Is a member of a family receiving food stamps for any three months in the last 15 months; and
- Served on active duty for at least 180 days, or was discharged due to a service-related disability; and
- Did not have any day for 60 days before being hired which was a day of "extended active duty' (extended active duty means a period of more than 90 days during which the individual was on active duty, other than active duty for training)
If a company is located in one of California's 43 Enterprise Zones (EZs), the company may be eligible for up to $31,000 of California tax credits (over five years) if the veteran hired meets any of the following three tests:
- left military service within the last 48 months, or
- is a service-related disabled veteran, or
- is a Vietnam era veteran