Work Opportunity Tax Credit for Tax-Exempt Nonprofits

June 1, 2012

Recent changes to the Work Opportunity Tax Credit (WOTC) have made incentives for hiring eligible veterans available to tax-exempt nonprofit organizations. Under the VOW To Hire Heroes Act of 2011, the WOTC was expanded to include credits for nonprofit organizations that can be claimed against the employer portion of social security tax on wages paid to all employees during the first year beginning the day a qualified veteran begins work.

The tax credit for nonprofits is up to $6,420 per veteran, not to exceed the total social security tax for the period for which the credit is claimed. If an organization hired an eligible veteran between November 22, 2011 and May 22, 2012, it can still apply for the tax credit but the deadline is June 19, 2012. After that time and for hires beginning work before January 1, 2013, employers must file the necessary Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state within 28 days of hire in order to receive the credit.

In addition, nonprofit organizations must file a Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. The IRS recommends employers do not reduce required deposits in anticipation of any credit.

Click here for Form 5884-C


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