The Virginia Telework Expenses Tax Credit is a new credit available to any business subject to income tax in Virginia. The legislation provides for a tax credit of up to $1,200 per employee, up to $50,000 per organization, for eligible telework expenses incurred during the taxable year. Of the $50,000 available per organization, up to $20,000 can be claimed for costs of conducting a telework assessment. This amount is not subject to the $1,200 per employee cap.
To be counted as a participating employee for purposes of claiming the telework expenses tax credit, an employee must telework at least one day per week. The employee must enter into a signed telework agreement and begin to telework on or after July 1, 2012 but before January 1, 2017. Eligible teleworking expenses include computer equipment, networking equipment and software, security and antivirus systems, Internet access, and communications equipment and services. Click here to read more detail in Virginia Code Section 58.1-439.12:07, Telework expenses tax credit, or go to teleworkva.redmon.com for further information.
Taxpayers are required to apply to the Virginia Department of Taxation to reserve a portion of the credit. The reservation application, Form TEL-1, must be filed between September 1 and October 31 of the year preceding the calendar year in which the eligible telework expenses will be incurred.
Taxpayers may claim this credit for taxable years beginning on or after January 1, 2012, but before January 1, 2017. The aggregate amount of tax credits that will be issued is capped at $1 million annually. If credit applications exceed the $1 million cap, credits will be allocated on a pro rata basis.
The actual credit per taxpayer is determined by how many applications are received. Another form, TEL-2, must be filed by April 1 of the year following the calendar year in which the eligible expenses were incurred. Once the Form TEL-2 is approved, the Virginia Department of Taxation will send a certification letter by June 30 providing the amount of the credit that can be claimed on the taxpayer’s Virginia return.
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