Veterans Tax Credit Expanded

Today the IRS released new guidance on the tax relief available to employers who hire veterans.

The Work Opportunity Tax Credit was made available under the VOW to Hire Heroes Act of 2011. For-profit employers may qualify for a credit of up to $9,600 per veteran hired. The actual amount of the credit depends on how long the veteran was unemployed before being hired and a whole host of other factors. A veteran who is hired after being unemployed for 2 years is worth more than one who took a 6-week vacation between jobs.

So what’s new with the credit?

  1. Now certain tax-exempt organizations may qualify for the tax credit ($6,240 max).
  2. Form 8850 — the form used to collect pertinent details about the veteran job applicant — previously had to be filed within 28 days after the veteran hire date, but now the rule is the form must be filed by June 19, 2012 for veterans hired before May 22, 2012.
  3. Employers can submit Form 8850 electronically or by fax.

Business use Form 5884 to claim the credit and tax-exempt organizations use Form 5884-C. For more information, see the IRS website.

Deal Finally Struck on Payroll Tax Cut Extension

It appears that Congress will be able to go home for Christmas after all. They finally struck a deal in Washington and narrowly avoided an automatic increase in the payroll tax rate.

House Republicans, under severe pressure from the White House, have agreed to the temporary two-month extension of the payroll tax cut that just days ago they killed, saying it was not good enough. Well, they are still saying it is not good enough, but they really had no choice but to pass this temporary measure.  The trade-off?  A conference committee will be appointed to convene in early January to work out a more permanent deal and the possibility of more permanent tax relief.

The stop-gap measure will still include the controversial Keystone pipeline project.

As part of this bill, unemployment benefits will also be extended for two months.

According to House Speaker John Boehner, the agreement should be voted on by unanimous consent before Christmas.