Tax Credits for Companies that Hire Veterans

Hiring Veterans – a resource for Human Resources Professionals, Hiring Managers, and companies that want to hire and retain talented veterans.  

Part 2:  Tax Credits for Companies that Hire Veterans

This is the second in a string of posts to help demystify the complex world of veteran employment from the perspective of the employer.  In the previous post we detailed the definition of a “Protected Veteran”, which is important for companies that are required to implement an Affirmative Action Plan (AAP) in order to comply with Office of Contract Compliance Program (OFCCP) regulations.  In this post, we look at incentives that governments as the state and federal level offer to companies for hiring veterans.

The simplest way for the government to incentivize companies to hire veterans is by providing tax credits to employers.  There are a wide variety of tax credits available for companies who employ veterans, and in some cases they can amount to tens of thousands of dollars off of a firm’s tax bill. The list that follows is not all inclusive, but it is a rollup of all of the incentives that I could find.  Some are currently unfunded (meaning that they have been funded in years prior but have not yet been funded for 2014), but just because they are unfunded today doesn’t mean that they will be unfunded tomorrow.  Most of the programs below are funded, and it is up to the employer to meet the administrative requirements to apply for the credits.

So what are the credits and what veterans are qualified for each credit?  Here is a brief description of each incentive along with links to the associated website(s):

In 2011, the Work Opportunity Tax Credit (WOTC) was changed by the VOW to Hire Heroes Act to include qualified veterans as a targeted group.  The credits apply to both for profit and non profit organizations, and amount to thousands of dollars per hire – which means that there is no limit to the number of qualified veterans a company can hire and claim for tax credits.  Although the VOW act was extended from the end of 2012 to the end of 2013, it has not been renewed since and the tax credits are not currently available but may be again in the future.  There are two groups of veterans eligible for credits:

Federal Incentives

  • The Returning Heroes Tax Credit of up to $5,600.  This applies to veterans who have been unemployed or who have received Supplemental Nutrition Assistance Program assistance (SNAP, aka Food Stamps) during the past year:
    • Short-term Unemployed: A credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for at least 4 weeks.
    • Long-term Unemployed: A credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for longer than 6 months.
  • The Wounded Warriors Tax Credit of up to $9,600.  This applies to unemployed veterans who have a disability related to service in the armed forces:
    • A credit 40% of the first $12,000 of wages (up to $4,800).

The Heroes Earnings Assistance and Relief Tax Act of 2008 (which had been extended until the end of 2013 and has not yet been renewed), provides incentives for small business.

The Community Renewal Tax Relief Act of 2000

Although these federal tax credits are currently expired, they may be renewed with future legislation.

In order to apply for the credits, the employer must follow the directions listed on the Internal Revenue Service (IRS)  website.

State Incentives

In addition to the Federal Government, eleven states also offer incentives for hiring veterans.  As of July 2014 all of the following state veteran hiring incentives are still available:

Alabama  $1000 for small businesses that hire recently deployed and now discharged unemployed Veterans.

http://revenue.alabama.gov/incometax/2012_forms/12schocinstr.pdf

Alaska  The credit available is $3,000 for the permanent hire of a disabled veteran and $2,000 for the permanent hire of a veteran not disabled. A credit of $1,000 is available for the employment of any veteran in a seasonal position.

http://www.tax.alaska.gov/programs/documentviewer/viewer.aspx?5142f

California  The credit is based on 35% of a new employee’s qualified wages or wages between 150% (or $10 for a Pilot Area) and 350% of minimum wage.  The business must qualify for the New Employment Credit (NEC).

https://www.ftb.ca.gov/online/New_Employment_Credit_Reservation/index.shtml

Delaware  Companies that hire veterans or National Guard members who have served in recent overseas conflicts are eligible for a tax credit is equal to 10% of wages, up to a maximum of $1,500.

http://revenue.delaware.gov/services/Business_Tax/veterans.shtml

Illinois  Illinois employers can earn an income tax credit of up to $5,000 annually for hiring veterans of Operation Enduring Freedom, or Operation Iraqi Freedom.

http://www2.illinois.gov/veterans/benefits/Pages/employment.aspx

Massachusetts  “For-profit” employers in Massachusetts that plan to hire certain low-income or disabled veterans may be eligible for a $4800 tax credit.

http://www.mass.gov/veterans/employment-and-training/tax-credit.html

New Mexico  The Veteran Employment Tax Credit will provide up to $1,000 to businesses each time they hire a veteran who has recently been discharged from the military.

http://www.dws.state.nm.us/Veterans/VetInformation/VeteranEmploymentTaxCredit

New York  Businesses may earn up to $5,000 for hiring a qualified Veteran, and up to $15,000 for hiring one who is disabled between January 1, 2014 and before January 1, 2016.

http://www.veterans.ny.gov/content/hire-vet-credit

Utah  Utah Veteran Employment Tax Credit provides a tax credit for the first year beginning at $200 per month, not to exceed $2,400 per year and increases the second year to $400 per month, not to exceed $4,800 per year for each veteran hired.

http://incometax.utah.gov/credits/veteran-employment

Vermont  The State of Vermont now provides a tax credit of $2,000 to employers who hire a veteran with recent military service.

http://veterans.vermont.gov/transitions/taxcredit

West Virginia  The West Virginia Military Incentive Act of 1991 (MIP) offers employers up to $5,000 in tax credits (based on a percentage of the first $5,000 in wages paid after one continuous year of employment) on their West Virginia corporate or personal tax liability for hiring any service-connected disabled veteran, economically-disadvantaged Vietnam-era or Korean conflict veterans, or unemployed active members of the National Guard or Reserves.

http://www.wvcommerce.org/business/workforcewv/veterans/mip/default.aspx

Tax credits and incentives change frequently, and are usually directly tied to the state and federal governments’ legislative cycle.  Check your state’s veterans agency and workforce development office for new or updated incentives.

 

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Hiring Veterans: Just what is a “Veteran”, anyway?

Hiring Veterans – a resource for Human Resources Professionals, Hiring Managers, and companies that want to hire and retain talented veterans.  

Part 1:  Just what is a “Veteran”, anyway?

This is the first in a string of posts to help demystify the complex world of veteran employment from the perspective of the employer.  There are literally thousands of articles, blog posts, and books about how to help veterans find a job, which is great.  There is a surprising lack of content out there, however, on how a company can best find, recruit, hire, train, and retain veterans.  That is what this and the following posts are all about –  helping hiring managers, Human Resources professionals, executives, supervisors, and the countless other people in a company understand how to bring veterans into their organizations and, more importantly, how to keep them. Veterans bring an exceptional set of technical skills to the workplace, and they have experience working with others, leading teams, accomplishing complex and time competitive tasks, operating under stress, exhibit inherent flexibility, and myriad other abilities and talents that any company would greatly benefit from.

Unfortunately, successfully hiring veterans is not that easy.  Depending on where your company is located, you may have difficulty finding a pool of veteran candidates with the skills that you need.  Are there any military bases close by?  Is there an active community of veterans that you can reach out to?  Do you know what skill sets veterans have?  These questions and more can prove to be very challenging for a hiring manager.

There are some very compelling reasons to hire veterans.  In addition to the skills and dedication that those who have worn the cloth of the nation bring, there are financial and tax incentives at the federal and state levels that can add up to tens of thousands of dollars in grants, tax credits, or other benefits for employers.  We’ll address those in a future post.

For companies holding government contracts there are explicit affirmative action requirements concerning veterans, including a ruling that was released in 2013 that broadened the definition of veteran status in terms of employment.  Known as the Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Special Disabled Veterans, Veterans of the Vietnam Era, Disabled Veterans, Recently Separated Veterans, Active Duty Wartime or Campaign Badge Veterans, and Armed Forces Service Medal Veterans rule, it is an update on previously existing regulations comes from the Department of Labor’s Office of Contract Compliance Programs (OFCCP).  The rule establishes a veteran hiring benchmark of 8% (with the intention of having a contractor’s roster of employees mirror the population of veterans in the nation’s workforce) and levies an extensive list of data collection and reporting requirements on firms with government contracts of more than $100,000 and/or more than 50 employees.

The best place to start is to begin by defining what a veteran is in terms of employment, and how it impacts a company’s Affirmative Action Plan. Simply serving in the military is enough to earn the title of “veteran”, but the title alone does not provide any advantages in terms of meeting a company’s affirmative action requirements.  To be able to meet the benchmark objectives set by OFCCP for compliance a veteran must fall into the “Protected Veteran” category as defined within the ruling. While the rule is a thrilling read (which you can download from the Federal Register here), to help get straight to the point here is a quick breakdown of the requirements to be considered a protected veteran along with examples of documentation which proves eligibility:

1.  Disabled Veteran status.  A disabled veteran is one who is entitled to compensation from the Department of Veterans Affairs.  A Special Disabled Veteran is one with a VA-assigned disability rating of 30% or greater (or 10% – 20% in case the veteran is determined to have a serious employment handicap) or was discharged or released from active duty because of a service-connected disability.

Documentation:  The Department of Veterans Affairs provides a Summary of Benefits letter to the veteran which denotes his or her disability rating.

2.  Veterans who served on active duty during a war or in a campaign or expedition.  In terms of this regulation, the last war was World War II, although active duty service for more than 180 days between August 5 1964 and May 7 1975 counts to establish protected veterans status as a “Vietnam Era Veteran” whether or not the veteran actually served in Vietnam.  All of the operations since 1945 are considered to be campaigns or expeditions, and to be considered a protected veteran a serviceman or servicewoman must have participated and received a campaign medal or badge as a result.  This can be confusing, but in a nutshell if a veteran served overseas in places like Iraq, Afghanistan, Kosovo, Kuwait, Vietnam or Korea then that veteran is a protected veteran.

Documentation:  The Department of Defense provides the veteran with a Certificate of Release or Discharge from Active Duty (DD-214), which contains the dates of service and lists all decorations and awards earned in section 13.  If a veteran has a campaign or expeditionary medal, then they are considered protected.  Service medals, except the Armed Forces Service Medal (below), do not count.

3.  Veterans who served on active duty and were awarded the Armed Forces Service Medal.  The Armed Forces Service medal is awarded for military operations that are not considered to be campaigns or expeditions, which essentially means non-combat or non-hostile operations.

Documentation:  As listed above, if section 13 of the DD-214 lists the Armed Forces Service Medal then the veteran is considered protected.  This is the only service medal medal that meets the requirement (the National Defense Service Medal and Global War on Terror Service Medal do not count).

4.  Recently discharged veterans.  Veterans who have been discharged for three years or less, regardless of whether they meet the requirements of 1, 2, or 3 above.

Documentation:  The DD-214 lists the date of release from active duty/discharge.

Those requirements are all pretty straightforward.  But what about people who served in the National Guard or Reserves?  That is where things get complicated. While those who serve in the Guard and reserve are veterans of the service, they may not fall in the protected veteran category.  Here is a breakdown of eligibility for Guard and reserve:

1.  Traditional service.  Guard/reserve personnel who serve out their obligations by only performing their weekend drills and annual training requirements are not protected veterans.  Even though they serve on active duty during their initial training periods, this service alone is not enough.

2.  Activated or mobilized for Federal service.  Guard/reserve personnel who are ordered to active duty are considered to be protected veterans if they deploy in support of a war, campaign, expedition or an operation that qualifies for the Armed Forces Service Medal.  If they are placed in federal service and do not deploy as listed above then they are not protected veterans.

Documentation:  Section 13 of the DD-214, which lists the medals that the veteran was awarded, just as with regular active duty veterans.

3.  Disabled veteran status.  As with active duty, Guard/reserve personnel who are entitled to disability compensation from the Department of Veterans Affairs are considered to be protected veterans.

Documentation:  The same as for active duty – the Department of Veterans Affairs provides a Summary of Benefits letter to the veteran which denotes his or her disability rating.

Hopefully this helps human resources professionals and hiring managers understand how veterans are defined under the new OFCCP ruling.  If you have any comments, please do let me know!  Next we’ll dive into incentives for hiring veterans…

 

 

The Drawdown Hits Home

Yesterday I had the great fortune to run into a Marine that I had the pleasure to work with while I was still on active duty.  The young sergeant, who had served honorably and faithfully for eight years and through three wartime deployments, shared with me that despite his overwhelming desire to stay in uniform and continue to serve the nation that he was being forced out of the Marine Corps.  Not because of anything he did – in fact just the opposite.  He was forced out because he loved what he was doing, but because of his success and the successes of countless thousands of others in uniform the need for so many Marines (and Soldiers and Sailors and Airmen) has diminished.  With the end of our active wars overseas comes the end of the need for the large military that had fought them, and with then of the need for so many uniformed military men and women comes the need to shrink the force.

That need is why such a talented, motivated, professional, and dedicated Marine NCO is being shown the door.  Along with thousands and thousands of professionals just like him.

Earlier in the week I attended an event in which LtGen John Toolan, the Commanding General of the 1st Marine Expeditionary Force, shared his personal dilemma in regards to the downsizing of the military.  His command, which has been on the absolute tip of the spear in Iraq and Afghanistan (having had elements ranging from platoons to divisions deployed to both theaters), is facing the practical realities of a contracting military.  He had over 4000 re-enlistment requests sitting on his desk (not really sitting there, but awaiting action from his headquarters) from Marines who want to continue to serve.

He only had the authority to approve 400 of them.

The effect of the reduction in forces is that one in ten Marines who want to stay in and continue to serve are able to do so.  The other nine are headed out the door to a future that does not include the career that they had anticipated.  Those nine are headed back into the society they served, and they will all need jobs once they arrive.

Josef Stalin once said that one death is a tragedy and one million is a statistic.  In the context of a career that is cut short by a shrinking military his words are strikingly relevant nearly a century after he uttered them.  One serviceman or servicewoman whose career is ended because of the vicissitudes of DOD force structure is indeed a tragedy because of the unfulfilled future to which they had dedicated their lives, but the tens of thousands who are being pushed out the door are just a statistic.

Edmund Burke also observed that the only thing necessary for the triumph of evil is for good men to do nothing.  If those of us who inhabit the society in which those in uniform will return simply look at the statistics and shrug them off, then we are guilty of failing each and every new veteran and allowing the evil of unemployment and underemployment to befall those who have ensured that our society remains free and unfettered by the shackles of tyranny.

So ask yourself: is the drawdown a cascade of individual tragedies that we can collectively help avert or a statistic that we will collectively ignore, or is there something we can do to make sure that the careers that they were not fulfilled in uniform can be created once they hang up the cloth of the nation?

 

A few thoughts on job and career fairs, part 1: Niche Events like Military MOJO

I have participated in more career and job fairs than I can count, and I have also had plenty of conversations with others who have made the circuit of job-seeking events.  Many of those I chat with are frustrated, and some of them have reached the point of “job fair fatigue” that they are giving up on attending them.

A lot of their frustration comes from an unclear set of expectations for what job fairs are about.  Not all job fairs are the same, and not all career fairs have the same goals, opportunities, or areas of interest.  Just like everything else in life, job and career fairs are different, and if you don’t recognize that going in then you, as a participant, will likely become frustrated and disillusioned.

There are many different types of fairs, and each of them provides a different service and experience for the transitioning military or veteran participant as well as for the companies and organizations that attend.  The underlying goal for fairs is universally the same – to provide avenues to employment for vets and those in transition – but how that goal is achieved varies with each and every fair.  To help those who are not familiar with the differences am writing a string of posts to highlight different types of events.

The first type of career fair is one that is focused on a specific niche of transitioning military and veterans.  Military MOJO is one organization that specializes in matching transitioning and veteran military officers and noncommissioned officers who have earned college degrees.  They have four conferences spread across the country throughout the year (in Austin, Virginia Beach, Washington D.C., and San Diego)  Dozens of companies are on hand at each conference to meet with hundreds of veterans, and a part of the engagement process includes resume review and placement of resumes onto a database that is accessible by participating companies.

Military MOJO’s next conference goes in Austin, Texas on March 27 and 28.  To learn more about the conferences, you can read the Military MOJO Conference Press Release.  If you for some reason you cannot follow the link, I have reposted the contents of the release below:

MOJO (Military Officers Job Opportunities) is a premier hiring event pairing commissioned military officers, senior non-commissioned officers, and non-commissioned officers holding degrees with national employers seeking veterans for leadership opportunities.  MOJO will be hosting four events this year in Austin, TX; Virginia Beach, VA; Washington, DC and San Diego, CA. Candidates and companies interested in this unique opportunity are invited to visit Military MOJO’s new website at http://www.militarymojo.org for more information on how to attend.

These events will showcase Commissioned Officers (formerly and currently commissioned): meet exclusively with Junior Military Officers (JMOs) and Senior Military Officers (SMOs) from the ROTC, OCS, CWO (Chief Warrant Officers), National Guard and graduates from the U.S. Air Force Academy, Coast Guard Academy, Merchant Marine Academy, Naval Academy, West Point, Norwich College, The Citadel, Villanova, VMI, and other military schools. Senior Non-Commissioned Officers: meet with SNCOs (E-7, E-8, E-9) who are experienced high-potential, skilled leaders. They have hands-on technical and functional training, four-year college degrees.  Transitioning Non-Commissioned Officers:  meet with young, ambitious, college-degreed transitioning NCOs who potentially have previous corporate experience. These candidates have a minimum four year B.S. or B.A. degree from an accredited university and some have their MBA’s.  Candidates skill set/experience will include: STEM, Six Sigma/Supply Chain, Operations, Logistics, Project Management, Sales/Marketing, Manufacturing, Cyber/Intel, Consulting, Government/Defense, and many areas of Engineering.  Most candidates have TS/SCI, CI & FS POLY Clearances.

Candidate registration includes individual resume review and career coaching, a networking reception, industry seminars and face-to-face interactions with national companies. Our volunteer team in comprised of former military officers and corporate executives who are committed to the mission of supporting veterans transitioning into the private sector. Company registration includes booth space, interview space, a recruiter focus group (best practices military hiring), networking reception with complimentary food, beverage & bar. Companies will receive resumes of registered candidates 2-3 weeks prior to the career fair. There are no extra fees for hires. For a list of companies currently attending the event click here.

The dates and locations for the 2014 hiring events are:

  •     Austin, TX – March 27-28, 2014
  •     Virginia Beach, VA – June 19-20, 2014
  •     Washington, DC – September 25-26, 2014
  •     San Diego, CA – December 4-5, 2014 

Each event will feature a company check-in, recruiter focus group, industry seminars/sponsorships and networking reception on the Thursday prior to the career fair to bring the companies and candidates together. The career fair will take place on the following Friday from 9am-4pm with a one hour lunch break.  To learn more about the conference and registration for the different locations, visit http://www.militarymojo.org.

About Military MOJO: Military MOJO hosts exclusive hiring events throughout the year to pair military officers with high profile employers. The niche career conference showcases candidates who are currently and formerly commissioned officers: ROTC, OCS, Service Academy – West Point, Naval Academy, Air Force Academy, Coast Guard Academy, Merchant Marine Academy, Citadel, VMI, VA Tech, Warrant Officers. Some in attendance will be Wounded Warriors Officers.  To learn more about Military MOJO and upcoming events, visit http://www.militarymojo.org.

Their career fair is a great example of one that focuses on a specific niche of veterans, and if you are in that group then you should certainly check it out.  In my next post we’ll take a look at job fairs on military bases.