RI-107: Tax Incentives for Employers (Revision 2017-11)

Who files this form

Form RI-107 is for employers claiming Rhode Island’s Tax Incentives for Employers for eligible employees.

Before an employer can claim the incentive, each employee must have completed both:

• At least 52 consecutive weeks of employment with the business.
• At least 1,820 hours of paid employment.

The employer claims the incentive for employees finally certified by the Department of Labor and Training during the business’s tax year.

What you'll need

Have the following ready:

• Your name, address, Social Security number or federal identification number, and tax year.
• Each employee’s name, complete Social Security number, and anniversary date of hire.
• Each employee’s W-2s covering the first 365 days of work. The form says W-2s from more than one year will be used to calculate first-year wages.
• The amount of any direct state or federal assistance received for each employee, which must reduce the wages used in the calculation.
• A copy of each employee’s certification of eligibility issued by the Department of Labor and Training. Attach these copies with Form RI-107 to the tax return.

How to file

1. Complete your identifying information and the tax year.
2. List each employee’s name, complete Social Security number, anniversary date of hire, and first-year wages in columns (a) through (d). Reduce eligible wages by any direct state or federal assistance received for that employee.
3. Multiply each employee’s first-year wages by 40% in column (e).
4. In column (f), enter the smaller of column (e) or $2,400 for each employee.
5. Add column (f) and enter the total on line 1.
6. Attach Form RI-107 and each employee’s Department of Labor and Training certification to the tax return for that year.

Transfer the total to the applicable return location printed on RI-107:

• RI-1040 or RI-1040NR: Schedule M, line 1m.
• RI-1120C: Schedule B, line 1f.
• RI-1120S or RI-1065: Schedule B, line 1c.
• T-71: line 3d.
• T-74: Schedule B, line 4.

The supplied text does not give a mailing address or e-filing directions.

Common mistakes

• Claiming the incentive before an employee meets both the 52-consecutive-week and 1,820-paid-hour requirements.
• Forgetting to attach each employee’s Department of Labor and Training certification.
• Failing to reduce first-year wages by direct state or federal assistance received for the employee.
• Claiming more than $2,400 for one employee.
• Using the incentive to reduce tax below the applicable minimum tax, claiming a refund for it, or carrying an unused amount into a later year. The form does not allow these uses.
• Claiming this incentive when the employee’s hiring is also used to obtain another tax incentive or tax benefit for the business.
• Splitting the incentive between Bank Excise and Bank Deposits taxes. A business liable for both must choose only one.

Questions people ask

How much is the incentive for each employee?

The incentive is 40% of the employee’s first-year wages, up to $2,400 per employee. Wages used in the calculation must be reduced by any direct state or federal assistance received for that employee.

What counts as first-year wages?

First-year wages are Rhode Island wages or salary actually paid by the business for the 365 days beginning on the employee’s first day of work, as shown by the business’s W-2s for the calendar years involved.

Can I carry an unused incentive forward or receive it as a refund?

No. The incentive is not refundable, and any amount unused in the business’s tax year cannot be carried into a following year. It also cannot reduce tax below the applicable minimum tax.

How is the incentive divided for an S corporation, LLC, partnership, or joint venture?

The incentive must be divided in the same manner as income.

Official sources

• https://tax.ri.gov/forms