A new act extends the work opportunity tax credit for one year but only for qualified veterans who begin work before Jan. 1, 2013. The act also makes a number of changes for hiring qualified veterans.

The Three Percent Withholding Repeal and Job Creation Act was signed by President Obama on Nov. 21, 2011.

Effective for individuals who begin work after Nov. 21, 2011, a qualified veteran is a veteran who is certified by the designated local agency as falling within one of the following categories:

1. The individual is a member of a family receiving assistance under a food stamp program for at least three months, all or part of which is during the 12-month period ending on the hiring date.

2. The individual is entitled to compensation for a service-connected disability and either:

• Has a hiring date that is no more than one year after having been discharged or released from active duty in the U.S. Armed Forces
• Has aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months

3. The individual has aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed four weeks (but less than six months).

4. The individual has aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months.

The last two categories of qualified veterans are new under the act.

Effective for individuals who begin work after Nov. 21, 2011, the maximum amount of qualifying first-year wages against which the credit may be claimed is:

• $12,000 for an individual who is a qualified veteran entitled to compensation for a service-connected disability and has a hiring date that is no more than one year after having been discharged or released from active duty. The maximum credit is $4,800 (40 percent of $12,000).
• $24,000 for an individual who is a qualified veteran entitled to compensation for a service-connected disability and has aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months. The maximum credit is $9,600 (40 percent of $24,000).
• $14,000 for an individual who is a qualified veteran having aggregate periods of unemployment during the one-year period ending on the hiring date that equal or exceed six months. The maximum credit is $5,600 (40 percent of $14,000).

A tax-exempt employer may claim a credit for hiring qualified veterans as if it were not tax-exempt. The credit is allowed against the Social Security tax that the exempt employer would otherwise have to pay on the wages of all its employees during the one-year period beginning with the day the veteran goes to work for the tax-exempt organization.