written by Melinda Thurman
Recently, Missouri added a small business income tax deduction applicable for all tax years beginning 01/01/2011 and ending 12/31/2014 for the creation of new jobs. As a small business owner, you don’t want to miss out on this deduction! If a small business creates new jobs, it may qualify to claim a deduction in the taxable year each new employee completes at least 52 weeks of full-time employment.
Due to the 52 weeks of employment requirement, the first taxable year the deduction can be calculated is for the tax year 2012. This deduction is equal to $10,000 for each new job created or $20,000 for each new job created by a small business that paid at least 50 percent of all employees’ health insurance premiums. The small business has to be taxed as a sole proprietor, C Corporation or LLC treated as a Corporation to qualify for this deduction; any other small business does not qualify.
The qualifications to be considered a small business are listed below:
- must employ fewer than 50 full-time or part-time employees
- must be subject to income taxes
- must ensure all new employees have completed at least 52 weeks of full-time employment prior to including the employee in the deduction calculation
- must pay wages of at least the county average wage, which is calculated by the Department of Economic Development
The deduction cannot be claimed until the employee completes at least 52 consecutive weeks of employment and works an average of at least 35 hours per week. In addition, the employee may not have been previously employed in Missouri by the small business or business affiliate for a period of 12 months prior to the creation of the new job. The deduction is claimed on the Missouri Form MO-NJD.
Please contact us for further information on this credit.