Form Tel-1 - Telework Expenses Tax Credit Reservation Application Page 2
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3Telework Expenses Tax Credit
Reservation Application Instructions
General Information
approval by December 31. If the applications for the
credit exceed the cap, the credits will be allocated to
The Telework Expenses Tax Credit is an individual
taxpayers on a pro rata basis.
and corporate income tax credit for employers who (1)
The Department of Taxation and DRPT intend to
incur eligible telework expenses pursuant to a telework
coordinate their efforts to carry out the provisions of
agreement or (2) conduct telework assessments. This
this credit.
credit is equal to the amount of expenses incurred
during the calendar year that ends during the taxable
Any credit attributable to a partnership, electing small
year, not to exceed $50,000 each calendar year.
business corporation (S corporation), or limited liability
company will be allocated to the individual partners,
To qualify for a credit for eligible telework expenses
shareholders, or members, respectively, in proportion
incurred pursuant to a telework agreement, the employer
to their ownership or interest in such business entities.
must enter into a signed telework agreement with the
teleworking employee on or after July 1, 2012, but
“Eligible telework expenses” means expenses incurred
before January 1, 2017. This telework agreement must
during the taxable year pursuant to a telework
be in accordance with policies set by the Department
agreement, in an amount up to $1,200 for each
of Rail and Public Transportation (DRPT). Such
participating employee, that enable a participating
policies are available on the Telework!VA website at
employee to begin to telework, which expenses are
The maximum amount of
not otherwise the subject of a deduction from income
expenses that can be used in determining the amount
claimed by the employer in any tax year. Such expenses
of this portion of the credit is $1,200 per employee.
include, but are not limited to, expenses paid or incurred
to purchase computers, computer-related hardware
The portion of the credit for telework assessment
and software, modems, data processing equipment,
expenses is equal to the costs of preparing an
telecommunications equipment, high-speed internet
assessment, not to exceed $20,000. This portion of
connectivity equipment, computer security software
the credit can only be claimed once by an employer.
and devices, and all related delivery, installation, and
Taxpayers may claim this credit for taxable years
maintenance fees. Such expenses do not include
beginning on or after January 1, 2012, but before
replacement costs for computers, computer-related
January 1, 2017. The aggregate amount of tax credits
hardware and software, modems, data processing
that will be issued is capped at $1 million annually. If
equipment, telecommunications equipment, or
credit applications exceed the $1 million cap, credits
computer security software and devices at the principal
will be allocated on a pro rata basis.
place of business when that equipment is relocated to
The amount of credit claimed cannot exceed the tax
the telework site. Eligible telework expenses may also
liability of the taxpayer. There is no carryforward of
include up to a maximum of $20,000 for conducting
any unused credit. Accordingly, even if a taxpayer is
a telework assessment on or after January 1, 2012.
granted a credit amount, he must have sufficient tax
Such costs shall be ineligible for this credit if they are
liability in order to actually claim the full credit amount.
otherwise taken as a deduction by the employer from
If the amount of credit granted exceeds the taxpayer’s
income in any taxable year. The costs included and
tax liability, he may only claim the credit up to the
allowed to be taken as a credit include program planning
amount of tax liability for the taxable year. To be eligible
costs, which may include direct program development
for this credit, the employer is not allowed to deduct
and training costs, raw labor costs, and professional
the qualified expenses in any taxable year. If these
consulting fees. Such costs shall not include those for
expenses are deducted for federal purposes, they will
which any other income tax credit is claimed. The credit
need to be included as an addition on your Virginia
for conducting a telework assessment shall be allowed
return. Taxpayers are not eligible for this tax credit if any
once for each employer meeting the requirements
other Virginia income tax credit is claimed based on the
herein.
jobs, wages, or other expenses for the same employee.
“Telework” means the performance of normal and
Taxpayers are required to apply to the Department of
regular work functions on a workday at a location
Taxation to reserve a portion of the credit. The reservation
different from the place where work functions are
application must be filed between September 1 and
normally performed and that is within or closer to the
October 31 of the year preceding the calendar year in
participating employee’s residence. The term shall not
which the eligible telework expenses will be incurred.
include home-based businesses, extensions of the
The Department of Taxation will provide tentative
workday, or work performed on a weekend or holiday.
3101040 REV 12/13
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