04.04.11

Virginia has enacted legislation providing an income tax credit to employers for telework expenses.  Specifically, the legislation provides that for taxable years beginning on or after January 1, 2012, but before January 1, 2014, an employer shall be allowed an income tax credit for eligible telework expenses incurred during the 2012 and 2013 calendar years.  The maximum credit amount any one employer may take during 2012 and 2013 is $50,000.  Also, the aggregate amount of tax credits that will be issued to taxpayers will not exceed $1 million annually for taxable years 2012 and 2013.

For purposes of the tax credit, “telework" means the performance of normal and regular work functions on a workday at a location different from the place where work functions are normally performed and that is within or closer to the participating employee's residence.   However, the term does not include home-based businesses, extensions of the workday, or work performed on a weekend or holiday.

"Eligible telework expenses" are defined as  expenses incurred during the taxable year pursuant to a telework agreement, in an amount up to $1,200 for each participating employee, that enable a participating employee to begin to telework, which expenses are not otherwise the subject of a deduction from income claimed by the employer in any tax year.  Such expenses include, but are not limited to, expenses paid or incurred to purchase computers, computer-related hardware and software, modems, data processing equipment, telecommunications equipment, high-speed Internet connectivity equipment, computer security software and devices, and all related delivery, installation and maintenance fees.  Eligible telework expenses may also include up to a maximum of $20,000 for conducting a telework assessment on or after January 1, 2012.  However, such costs shall be ineligible for the telework credit if they are otherwise taken as a deduction by the employer from income in any taxable year.

The amount of the credit available to any employer in any taxable year shall not exceed the employer’s tax liability.  Employers are not allowed to carry forward or carry back any unused credit.  Also, an employer is ineligible for the tax credit if the employer claims any other income tax credits.

An employer seeking to claim the tax credit must submit a reservation application to the Tax Commissioner for tentative approval of the credit between September 1 and October 31 of the year proceeding the taxable year for which the tax credit is to be earned.

Please contact Michael Fletcher by phone (703.770.0533) or email (mfletcher@argy.com) for assistance evaluating your credit and preparing your submission.
 

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