Tax Credit for Hiring a Veteran with Recent Military Service

The State of Vermont now provides a tax credit to employers who hire a veteran with recent military service.  The tax credit also extends to veterans with recent service who start their own business.

To be eligible, a veteran must:

  • Have left federal, active duty within the past 24 months
  • Have been a resident of Vermont at the time of entry into military service OR served in a guard or reserve unit located in Vermont
  • Be eligible to receive Unemployment from the VT Dept of Labor, or would be eligible except Unemployment has been exhausted

Applicants should fill out Office of Veterans Affairs Form 44 and send it, along with a copy of their most recent DD Form 214, to the Office of Veterans Affairs.  Additional information is on the form, and there are questions and answers below.


Questions and Answers about the Tax Credit

How much is the Tax Credit?

$2,000 to employers for hiring a veteran; up to $2,000 to veterans who start their own business.

How long will the program be available?

The program expires December 31, 2012.

What is the date range for new hires that are covered by this credit?

The new hire must occur between May 24, 2011, and December 31, 2012.  For veterans who start a new business, the business must be started by December 31, 2012.

Is this only available to Vermont residents?

This is available to veterans who were a resident of Vermont at the time of entry into the active, federal military service OR was mobilized to active, federal military service with the Vermont National Guard or a reserve unit located in Vermont.

Is the tax credit good for all businesses in Vermont?

No.  The employer must be in good standing with the Secretary of State, Vermont Department of Taxes, and Vermont Department of Labor.  They must also have a valid worker’s compensation policy.

Can the tax credit be used by a business outside of Vermont?

The credit is only available to businesses that file state taxes in Vermont.

Is the tax credit good for all positions?

No.  The position must be at least 35 hours a week, the position must be held for 45 of the 52 weeks following the hire, and the compensation must be equal to or exceed the prevailing compensation level for that employment sector and region of the state. 

Where can I get information about my military service eligibility?

Call the Office of Veterans Affairs at (toll free in-state) 888-666-9844 or 802-828-3379.

Where can I get information about my unemployment status eligibility?

Call the Vermont Dept of Labor Unemployment Claimant Assistance Line at (877) 214-3332.

For veterans using this credit to start a new business, does the veteran have to be the sole owner?

The veteran must hold at least a 50% ownership interest in the business.

For a new business, does the business have to be profitable?

Yes.  The business must show a net profit of at least $3,000 for the year in which the credit is taken. 

What expenses associated with starting a new business can be counted towards the tax credit?

The following expenses associated with a start-up business, up to a maximum of $2,000, may be deducted:

(A) expenses associated with the development of a business plan;
(B) professional services associated with the formation of the business (e.g., attorney and accounting services);
(C) an analysis or survey of potential markets, products, labor supply, or transportation facilities;
(D) advertisements for the opening of the business;
(E) salaries and wages for employees who are being trained and their instructors;
(F) travel and other necessary costs for securing prospective distributors, suppliers, or customers;
(G) salaries and fees for executives and consultants, or for similar professional services.

 

Instructions from Office of Veterans Affairs Form 44

 

1.  Complete the Applicant Information portion of the Certification for Unemployed Veteran with Recent Military Service form.  Make sure to complete all blocks within this section and to print legibly.

 

2.  Vermont Office of Veterans Affairs (VOVA) will determine if the applicant meets the military service eligibility criteria.  Deliver the form to VOVA via:

Mail or In Person: 118 State Street, Montpelier, VT 05620-4401

Fax: (802) 828-5932

Applicants should include a copy of their most recent DD Form 214 to ensure fast and accurate processing.   VOVA may require additional documentation necessary to verify eligibility.  Approved applications will be stamped by VOVA and returned to the applicant.  Disapproved applications will be returned to the applicant by VOVA with the reason for disapproval.

 

3. The Vermont Department of Labor (VDOL) will determine if the applicant meets the Unemployment eligibility criteria.  Applicant will deliver applications approved by VOVA to the local VDOL Resource Center listed below.  Approved applications will be stamped by VDOL and returned to the applicant.  Disapproved applications will be returned to the applicant by VDOL with the reason for disapproval.  

 

Town

Location

Phone

Barre

McFarland State Office Building, 5 Perry Street, Suite 200

476-2600

Bennington

150 Veterans Memorial Drive, Suite 2

442-6376

Brattleboro

State Office Building, 232 Main Street

254-4555

Burlington

63 Pearl Street

863-7676

Middlebury

1590 Route 7 South, Suite 5

388-4921

Morrisville

197 Harrel Street

888-4545

Newport

Emory E Hebard State Office Building, 100 Main Street, Suite 210

334-3351

Randolph

50 Randolph Avenue (by appointment only)

476-2600

Rutland

200 Asa Bloomer Building

786-5837

St. Albans

20 Houghton Street, Room 101

524-6585

St. Johnsbury

1197 Main Street, Suite 1

748-3177

Springfield

56 Main Street, Suite 101

885-2167

White River Jct.

220 Holiday Drive, Suite 28, Gilman Office Center

295-8805

 

4A. New Hire: After receiving approval from both VOVA and VDOL, provide the form to your new employer.  The employer will then file this document with the Vermont Department of Taxes (VTAX), which will also require documentation of employer and position criteria. 

 

4B: New Business: After receiving approval from both VOVA and VDOL, the applicant will provide the form to VTAX when filing your income tax return.  Additional documentation will be required to verify eligibility criteria and allowable expenses.

 

Period of Eligibility

This tax credit is for new hires or new businesses started between May 24, 2011 and December 31, 2012.  A credit earned under this section may be claimed in the tax year following the new full-time employee’s date of hire, or in the tax year following the date that the start-up business was created, and may be carried forward one year.  Appropriate tax forms and instructions to claim this credit may be downloaded from the VTAX website (www.state.vt.us/tax/index.shtml).

 

Military Service Eligibility Criteria

The date of hire or date of new business start up must be within 24 months of an Honorable or General Discharge from active, federal military service.  The veteran must either have been a resident of Vermont at the time of entry into the military or was mobilized to active, federal military service while a member of the Vermont National Guard or other reserve unit located in Vermont.

 

Unemployment Eligibility Criteria

The applicant must be collecting unemployment benefits, be eligible to collect unemployment benefits, or have exhausted unemployment benefits.  For new hires, the applicant must not have been employed by the employer within the past 90 days.  Questions regarding Unemployment eligibility criteria can be directed to the VDOL Unemployment Claimant Assistance Line at (877) 214-3332.

 

Employer Criteria

To be eligible to receive the tax credit, an employer must be in good standing with respect to applicable registration, fee, and filing requirements with the Secretary of State, VTAX, and VDOL.  In addition, the employer must have in place a valid workers’ compensation policy.
 

Position Criteria

To be eligible to receive the tax credit, an employer must hire the applicant to a position that provides at least 35 hours per week of work for not less than 45 of the 52 weeks following the date of hire.  In addition, the position must provide compensation that equals or exceeds the prevailing compensation level, including wages and benefits, for the particular employment sector and region of the state as determined by the VDOL Commissioner.  Employers can determine if a position they have is qualified by visiting the VDOL website (www.labor.vermont.gov/veterans) or calling (802) 828-4153.

 

New Business Eligibility Criteria

To be eligible to receive the tax credit for a new start up business, the applicant must hold at least a 50% ownership interest in the business and the business must show a net profit of at least $3,000 for the year in which the credit is taken. 

 

New Business Allowable Expenses

The following expenses associated with a start-up business, up to a maximum of $2,000, may be deducted:

(A) expenses associated with the development of a business plan;

(B) professional services associated with the formation of the business (e.g., attorney and accounting services);

(C) an analysis or survey of potential markets, products, labor supply, or transportation facilities;

(D) advertisements for the opening of the business;

(E) salaries and wages for employees who are being trained and their instructors;

(F) travel and other necessary costs for securing prospective distributors, suppliers, or customers;

(G) salaries and fees for executives and consultants, or for similar professional services.