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With the enactment of H.B. 327 on June 6, 2012, the Ohio legislation created a refundable job creation income tax credit for companies that employ home-based employees. The credit may be claimed against the following tax types: commercial activity tax (CAT), corporate franchise tax, personal income tax, and the insurance premiums tax.
"Home-based employee" is defined as an employee whose services are performed primarily from his or her Ohio residence exclusively for the benefit of the project and whose rate of pay is at least 131% of the federal minimum wage.
As modified under ORC 122.17(C), an application shall not propose to include both home-based employees and employees who are not home-based employees in the computation of income tax revenue for the purposes of the same tax credit agreement. If a taxpayer or potential taxpayer employs both home-based employees and employees who are not home-based employees in a project, the taxpayer shall submit separate applications for separate tax credit agreements for the project, one of which shall include home-based employees in the computation of income tax revenue and one of which shall include all other employees in the computation of income tax revenue.
If the tax credit is computed on the basis of home-based employees, the tax credit may not be claimed by the taxpayer until the taxable year or tax period in which the taxpayer employs at least 200 employees more than the number of employees the taxpayer employed on June 30, 2011, and the credit will expire after six years.
To claim the credit, taxpayers must report to the Department of Development their number of home-based employees and regular employees employed in Ohio by January 1 each year.
If you have questions about whether or not you qualify for the credit, please contact Mark Rossetti in the SALT group at (614)586-7234.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.
The general rule under Internal Revenue Code §451 is that an item of income shall be included in gross income for the taxable year or receipt unless ...