06.04.15 |
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Targeted Hires Give New York Employers Opportunities for Various Tax Credits

Big appleEmployers in New York can be eligible for tax credits enacted to help stimulate the hiring of members of targeted groups.  The credits are available for employers who hire veterans, youth, workers with a disability, and persons who are currently making a minimum wage.  Each credit is outlined below.

Hire a Veteran Credit[i]

Effective for taxable years beginning on or after January 1, 2015, and before January 1, 2017, New York offers employers a credit for hiring qualified veterans.[ii]  The credit is 10 percent of total wages paid to the qualified veteran during the veteran’s first full year of employment, with a cap of $5,000 per veteran.  If the qualified veteran is disabled, the credit amount increases to 15 percent of total wages paid during the first full year of employment, with a cap of $15,000 per veteran.

A qualified veteran is defined as an individual[iii]:

  1.  Who served on active duty in the U.S. army, navy, air force, marine corps, coast guard or the reserves thereof, or who served in active military service of the U.S. as a member of the army national guard, air national guard, New York guard or New York naval militia;
  2. Who was released from active duty by general or honorable discharge after September 11, 2001;
  3. Who commenced employment with the qualified taxpayer on or after January 1, 2014, and before January 1, 2016; and
  4. Who certifies by signed affidavit that he or she has not been employed for 35 or more hours during any week in the 180-day period immediately prior to employment.
  5. A qualified veteran is considered a disabled veteran if the veteran meets the criteria of Section 85.1(b) of New York Civil Service Law.

Youth Works Program[iv]

 

New York offers employers a credit for employing certified at-risk youth to both full-time and part-time positions.[v]  The credit amount is:

  • $500 per month for up to six months for each certified employee placed in a full-time job, or $250 per month for up to six months for each certified employee placed in a part-time job meeting defined hour requirements; and
  • $1,000 for each certified employee who is employed for an additional six months in a full-time job, or $500 for each certified employee who is employed for an additional six months in a part-time job meeting defined hour requirements; and
  • For years beginning on or after January 1, 2014, $1,000 will be given for each certified employee who is employed for an additional year after the first year of employment in a full-time job, or $500 for each certified employee who is employed for an additional year after the first year of employment in a part-time job meeting defined hour requirements.

A certified at-risk youth is an individual who:

  1.  Is between 16 and 24 years of age;
  2. Resides in a city with a population of 55,000 or more, or a town with a population of 480,000 or more;
  3. Meets at least one of the “at risk” factors defined by the New York Department of Labor (the employer cannot ask the employee why he or she is certified);
  4. Is unemployed at the time the individual is hired;
  5. Will be working in a full-time or part-time position that pays wages equivalent to wages paid for similar jobs, with adjustments allowed for experience and training; and
  6. Is filling a position for which no other employee has been terminated, or where the employer has not otherwise had a workforce reduction with the intention to fill the vacant position by creating a new hire.[vi]

To be eligible, an employer must be certified by the New York Department of Labor as a qualified employer.  The credit is available for employees hired through December 31, 2019.

Credit for Employment of Persons with Disabilities[vii]

Since 1998, New York has offered employers a credit for employing workers with disabilities.[viii] The credit is available for hiring an individual who meets the following criteria:

  1.  The employee must qualify as a “vocational rehabilitation referral” for purposes of the federal Work Opportunity Tax Credit.
  2.  The employee must be a full-time employee for at least 180 days or 400 hours.
  3.  The employee must be certified by the New York Department of Education (or other designated state agency, in the case of blind or visually handicapped) as meeting the following:
  4.  The employee is an individual with a disability that constitutes or results in a substantial handicap to employment.
  5.  The individual has completed or is receiving services under an approved individualized written rehabilitation plan.

The credit is 35 percent of the first $6,000 (for a cap of $2,100) of qualified first-year wages paid to the employee.  For any employee whose qualified first-year wages also qualify for the Federal Work Opportunity Tax Credit program, the credit is instead 35 percent of the first $6,000 of qualified second-year wages.

Workers with Developmental Disabilities Tax Credit Program[ix]

Effective January 1, 2015, a credit is available to approved employers for hiring individuals with developmental disabilities.[x] The additional credit is 15 percent of wages paid to an eligible full-time employee (with a maximum of $5,000), or 10 percent of wages paid to an eligible part-time employee (with a maximum of $2,500).

To be eligible, an employer must certify with the New York Department of Labor by November 30 of the previous year.  Individuals who are eligible for the credit must also be certified by the Department of Labor, and must meet the following requirements:

  •  The individual must be deemed “developmentally disabled” within the meaning of Subdivision 22 of Section 1.03 of the Mental Hygiene law.
  •  The individual must be certified by the New York Department of Education or Office of People with Developmental Disabilities as having a substantial handicap to employment, and have completed or is receiving vocational rehabilitation services.
  •  The individual must be either unemployed prior to October 1, 2014, or currently working at a sheltered workshop.
  •  The individual must work in either a full-time or part-time capacity in New York and must be paid wages equivalent to similar jobs.
  •  The individual cannot have worked for the certified employer or a related business within the previous two years.

The Workers with Developmental Disabilities Tax Credit will expire on January 1, 2020.  Employers who claim the Workers with Developmental Disabilities Tax Credit cannot also claim the original Credit for Employment of Persons with Disabilities on the same employee.

Minimum Wage Reimbursement Credit[xi]

New York offers a credit to employers who pay the New York minimum wage to certain eligible employees.[xii] To be eligible, the employee must be:

  1.  At least 16 years of age, but less than 20 years of age, at the time of employment,
  2. A student during the period of credit eligibility,
  3. Employed in the state of New York, and
  4. Paid at the New York minimum wage rate.

The amount of credit is equal to the number of hours worked by the eligible employee multiplied by the applicable statutory rate.  The rates are as follows:

  •  $0.75, for tax years beginning in 2014.
  • $1.31, for tax years beginning in 2015.
  • $1.35, for tax years beginning 2016 through 2018.

If the federal minimum wage is increased to 85 percent or more of the New York minimum wage, the credit rate will be reduced to the difference between the New York minimum wage and the federal minimum wage.  The credit expires December 31, 2018.  Note (i) employers will not be eligible if they replace an ineligible employee with an eligible employee solely for the purpose of qualifying for the credit and (ii) the employee used to qualify for this credit may not be used as the basis for another credit.

 
Learn More About ADP SmartCompliance® Tax Credits
 

[i] Section 210-B(29) of Chapter 60, Article 9-A

[ii] http://www.tax.ny.gov/pdf/memos/multitax/m13_9c_8i.pdf

[iii] Section 210-B(29)(b)

[iv] Section 210-B(36) of Chapter 60, Article 9-A

[v] https://labor.ny.gov/formsdocs/factsheets/pdfs/P428.pdf

[vi] Section 25-a(b) of New York Labor Law

[vii] Section 210-B(12) of Chapter 60, Article 9-A

[viii] https://labor.ny.gov/businessservices/edsu/edsu%20wetc.shtm

[ix] Section 210-B(48) of Chapter 60, Article 9-A

[x] https://labor.ny.gov/businessservices/PDFs/WDDTC-PPT.pdf

[xi] Section 38 and Section 210-B(40) of Chapter 60, Article 9-A.

[xii] http://www.tax.ny.gov/pdf/memos/multitax/m13_8c_7i.pdf


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