If You're Hiring in CT, A Tax Credit May Be Available for You
As a small business owner, and like many of you, I try to stay current with changing government policies that will have an affect on my business. But I think we all can agree that when we try to have our finger on the pulse of so many different aspects of our business at once, things go unnoticed and we can miss out on opportunities. My business consultant/coach recently made me aware of a business tax credit for Connecticut companies that I'd like to share this month since you may be eligible to take part in this tax credit if you are hiring new employees.
As I highlight some information below, I recommend that you consult the Connecticut tax law and seek guidance issued by the Connecticut Department of Revenue Services and the Department of Economic and Community Development. I am not intending to give tax advice (we're phone guys, remember?), but just relay some exciting information that might be of interest.
Surprisingly, this new tax credit is approved quickly with minimal paperwork. You might find that hard to believe, but we just went through it so I can assure you it's true.
This credit is a huge win for us and it was all the encouragement we needed to hire two new employees!
New Tax Credit for 2012
In October of 2011, Governor Malloy signed into law, House Bill 6801, An Act Promoting Economic Growth and Job Creation in the State. The act contains several tax provisions (which replace previous tax credit programs). One newly created provision that you might like is the Job Expansion Credit (JET). As stated by the Department of Economic and Community Development (DECD), "Connecticut businesses can be eligible for tax credits of $500 per month for each new full-time job created." They go on to state that the tax credit is increased to $900 per month if you hire individuals who are unemployed, disabled or veterans and meet other certain criteria. This money is a credit against your Connecticut state income taxes.
The credit applies to jobs created from January 1, 2012 through January 1, 2014, however the credit is issued for 3 years after the date of application. See the chart below for applicable taxes, eligibility credits, credit amount and dates of availability. If your business is growing and will expand, you should look into this bill to see if you satisfy the conditions.
Chart by www.arcofct.org
The newly created job must be 35 hours per week for at least 48 weeks of the calendar year so seasonal and temporary jobs do not count toward the credit. However, I recently spoke with Lindy, the representative from the DECD who told me they've relaxed the requirements on the 48 week employment criteria to count for the first year and they will give a partial credit if you hire someone after the February 1, 2012 deadline. Click on the image below to see the Job Expansion Tax Credit program overview.
As mentioned above, the application process for this new tax credit is quite simple and once paperwork is submitted, the DECD is required to act on each completed application within 30 days of receiving it. We were approved on the spot, once we submitted the appropriate paperwork. (Our thanks to Lindy and the rest of the DECD for making this happen!) But beware - the funding for this program will not last, and it is on a first-come, first served basis.
This credit is a HUGE win for us and it was all the encouragement we needed to hire two new employees. This credit is worth $18,000 (over 3 years) for one employee hired ($36,000 for two). Doing simple math, and assuming we are at a 7.5% state tax rate, this credit turns into $80,000 worth of corporate profits we could earn per year per new employee before paying any state income tax!
If you want more information on our experience with this new tax credit, call me at 203-493-0267 or send me an email. We like to take it one step further... and are always looking for a better way to
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Michael LeBlanc, Founder and CEO
LeBlanc Communications Group, Inc.