New York State Tax Law provides a credit to eligible employers (and owners of eligible employers) who employ students in New York State that earn minimum wage. This article will explain more about the Minimum Wage Reimbursement Credit, who qualifies and how to take advantage of it.
Who qualifies?
You may be entitled to the Minimum Wage Reimbursement Credit if you employ students in New York State for tax years beginning on or after January 1, 2014, and before January 1, 2019, who are least 16 but not yet 20 years of age and are paid at the New York minimum wage rate.
How much is the credit?
The credit is equal to the total number of hours worked by eligible employees during the taxable year for which they are paid the New York minimum wage, multiplied by the applicable tax credit rate for that year.
The current applicable tax credit rate (beginning on or after January 1, 2016, and before January 1, 2019) is $1.35.
For example, if your student employee works 18 hours per week for 40 weeks this year, they will have worked a total of 720 hours in 2017. That would entitle you to a credit of $972 (720 x $1.35).
How to verify student status
You must obtain documentation to verify that the individual is currently enrolled as a student at an eligible educational institution. You must retain a copy of the student's documentation for your records and make it available to the Tax Department upon request. Examples of acceptable documentation include:
- a student's identification card
- a student's current or future course schedule issued by the school
- a letter from the student's school verifying his or her current or future enrollment
- working papers (New York State Department of Labor Student General Employment Certificate - AT‑19)
Claiming the credit
Corporations should use Form CT-639 to claim the credit and Form CT-639-I for instructions.
All other employers should use Form IT-639 to claim the credit and Form IT-639-I for instructions.
Key definitions
An eligible employer is a corporation (including a New York S corporation), a sole proprietorship, a limited liability company, or a partnership.
An eligible employee is an employee who...
- employed by an eligible employer in New York State;
- paid at the minimum wage rate, as defined in Article 19 of the Labor Law, during some part of the taxable year by the eligible employer;
- at least 16 but not yet 20 years of age; and
- a student during the period he or she is paid at the New York minimum wage rate by the eligible employer.
An eligible educational institution is one that maintains a regular faculty and curriculum, and has a regularly enrolled body of students in attendance at the place where its educational activities are regularly carried on. Examples of eligible educational institutions include secondary schools, colleges and universities, and any institution that offers a program of training to prepare students for gainful employment in a recognized occupation such as trade, technical, and vocational schools. Eligible educational institutions do not include correspondence schools, schools offering courses only through the Internet, or on-the-job training courses.
