written by Kevin Hogan

Kevin Hogan BW 9-06Small businesses in Missouri may qualify to claim a special state tax deduction for each new job they create in 2013 and 2014. View 2012 version here.

Summary:

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 at www.missourieconomy.org/indicators/countywage.stm (i.e. Greene County Average wage for 2012 was $36,398).
  • 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 November 1 as its comparison date. On November 1, 2013, ABC employed 35 full-time workers, and on November 1, 2012, ABC had only 33 full-time workers. The two new full-time employees made more than the county average wage of $36,398.

ABC, Inc. is allowed to deduct an additional $20,000 (2 times $10,000) on their 2013 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).

Contact us if you have any questions about this tax deduction 417-881-0145.