Missouri Income Tax Deduction for New Workers
One of the fun parts about my job is finding cool tax
deductions or credits that people don’t know about but can be a real tax
saver. The one I want to talk about
today is called the “Missouri Income Tax Deduction for New Workers”.
Notice this is a “state” tax deduction. The thing about state deductions is that most
of them won’t just pop up on your tax software.
You have to actually know about them and specifically request the forms
to come up. How sneaky is that.
Here’s how it works:
If you are a small business you may qualify to claim a
special state tax deduction for each new
job you create in 2013 and 2014.
Eligible Small Business:
- Employ fewer than 50 full-time and part-time employees at all times during the tax year for which the deduction is taken.
Eligible Employee:
- Completed
at least 52 consecutive weeks of full-time employment (average
35-hours/week).
- Earned wages for the 52 week period above the “county average wage” as determined by the department of economic development. – click here for average wages by county
- (Greene County Average wage for 2013 was $36,840)
- Not previously employed in Missouri by the small business or any business affiliated with the small business for a period of 12 months prior to the creation of the new job.
State Tax Deduction:
- The
deduction equals $10,000 for each new job created or $20,000 for each new
job created in which employer paid at least 50% of the employees’ health
insurance.
“New” Jobs Created:
- The
small business must choose a single date to compare the number of
full-time employees on that date in the deduction year, to the number
employed on the same date in the immediately preceding year.
Example:
ABC, Inc., an S-Corporation, had fewer than 50
full-time and part-time employees in Greene County for all of 2013. ABC chooses
December 31st as its comparison date. On December 31, 2014, ABC employed 35
full-time workers, and on December 31, 2013, ABC had only 33 full-time workers.
The two new full-time employees made more than the county average wage of $36,840.
ABC, Inc. is allowed to deduct an additional $20,000 (2
times $10,000) on their 2014 state income tax return. The $20,000 deduction is
passed through to the S-Corporation shareholders, who take the deduction on
their Missouri state income tax return. Total tax savings to the shareholders
would be $1,200 (6% state tax rate times the $20,000 deduction).
If your business is growing and you meet the criteria above
let me know and we will take the deduction on the 2014 return.
