Form Tel-1 - Telework Expenses Tax Credit Reservation Application Page 4
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5Telework Expenses Tax Credit Instructions
General Information
the amount listed in the tentative allocation letter. Taxpayers
who spend less than the amount estimated on Line 4 of Form
The Telework Expenses Tax Credit is an individual and
TEL-1 may be granted a credit amount that is less than the
corporate income tax credit for employers who (1) incur
tentative allocation amount. The final allocation amount
eligible telework expenses pursuant to a telework agreement
depends on the number of applicants and the amount of
or (2) conduct telework assessments. This credit is equal to
eligible expenses incurred by each applicant.
the amount of expenses incurred during the calendar year
The Department of Taxation and DRPT intend to coordinate
that ends during the taxable year, not to exceed $50,000
their efforts to carry out the provisions of this credit.
each calendar year.
Any credit attributable to a partnership, electing small business
To qualify for a credit for eligible telework expenses incurred
corporation (S corporation), or limited liability company will
pursuant to a telework agreement, the employer must enter into
be allocated to the individual partners, shareholders, or
a signed telework agreement with the teleworking employee
members, respectively, in proportion to their ownership or
on or after July 1, 2012, but before January 1, 2017. This
interest in such business entities.
telework agreement must be in accordance with policies set
by the Department of Rail and Public Transportation (DRPT).
“Eligible telework expenses” means expenses incurred
Such policies are available on the Telework!VA website at
during the taxable year pursuant to a telework agreement,
The maximum amount of expenses
in an amount up to $1,200 for each participating employee,
that can be used in determining the amount of this portion
that enable a participating employee to begin to telework,
of the credit is $1,200 per employee.
which expenses are not otherwise the subject of a deduction
from income claimed by the employer in any tax year. Such
The portion of the credit for telework assessment expenses is
expenses include, but are not limited to, expenses paid or
equal to the costs of preparing an assessment, not to exceed
incurred to purchase computers, computer-related hardware
$20,000. This portion of the credit can only be claimed once
and software, modems, data processing equipment,
by an employer.
telecommunications equipment, high-speed internet
Taxpayers may claim this credit for taxable years beginning
connectivity equipment, computer security software and
on or after January 1, 2012, but before January 1, 2017. The
devices, and all related delivery, installation, and maintenance
aggregate amount of tax credits that will be issued is capped
fees. Such expenses do not include replacement costs
at $1 million annually. If credit applications exceed the $1
for computers, computer-related hardware and software,
million cap, credits will be allocated on a pro rata basis.
modems, data processing equipment, telecommunications
The amount of credit claimed cannot exceed the tax liability of
equipment, or computer security software and devices at
the taxpayer. There is no carryforward of any unused credit.
the principal place of business when that equipment is
Accordingly, even if a taxpayer is granted a credit amount,
relocated to the telework site. Eligible telework expenses may
he must have sufficient tax liability in order to actually claim
also include up to a maximum of $20,000 for conducting a
the full credit amount. If the amount of credit granted exceeds
telework assessment on or after January 1, 2012. Such costs
the taxpayer’s tax liability, he may only claim the credit up to
shall be ineligible for this credit if they are otherwise taken
the amount of tax liability for the taxable year. To be eligible
as a deduction by the employer from income in any taxable
for this credit, the employer is not allowed to deduct the
year. The costs included and allowed to be taken as a credit
qualified expenses in any taxable year. If these expenses are
include program planning costs, which may include direct
deducted for federal purposes, they will need to be included
program development and training costs, raw labor costs,
as an addition on your Virginia return. Taxpayers are not
and professional consulting fees. Such costs shall not include
eligible for this tax credit if any other Virginia income tax credit
those for which any other income tax credit is claimed. The
is claimed based on the jobs, wages, or other expenses for
credit for conducting a telework assessment shall be allowed
the same employee.
once for each employer meeting the requirements herein.
Taxpayers are required to apply to the Department of
“Telework” means the performance of normal and regular
Taxation to reserve a portion of the credit. The reservation
work functions on a workday at a location different from the
application (Form TEL-1) must be filed between September
place where work functions are normally performed and that is
1 and October 31 of the year preceding the calendar year
within or closer to the participating employee’s residence. The
in which the eligible telework expenses will be incurred. The
term does not include home-based businesses, extensions
Department of Taxation will provide tentative approval by
of the workday, or work performed on a weekend or holiday.
December 31. If the applications for the credit exceed the cap,
“Telework agreement” means an agreement signed by the
the credits will be allocated to taxpayers on a pro rata basis.
employer and the participating employee, on or after July
Taxpayers who received a tentative allocation letter must then
1, 2012, but before January 1, 2017, that defines the terms
confirm the amount of eligible telework expenses actually
of a telework arrangement, including the number of days
incurred by filing Form TEL-2. Any taxpayer who actually
per month the participating employee will telework in order
spends the estimated amount that was listed on Line 4 of
to qualify for the credit, and any restrictions on the location
Form TEL-1 will be granted a credit equal to or greater than
3101040 REV. 01/16
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