306D: Coalfield Employment Enhancement Tax Credit Tax Designation and Credit Calculation (2024)
Virginia · Virginia Tax · Used for tax years 2024
Virginia Form 306D lists the state taxes to be offset by the Coalfield Employment Enhancement Tax Credit and calculates the credit allowed on your 2024 income tax return. It reports qualifying tax payments and calculates any excess credit.
Who files this form
Use 2024 Form 306D to list the state taxes you will offset with the Coalfield Employment Enhancement Tax Credit and calculate the credit allowed on your 2024 income tax return.
To claim the credit for 2024, you must have earned and reported it on your 2021 income tax return. The calculation starts with the credit on your 2021 Form 306, Line 11.
No new credits can be earned for taxable years beginning on or after January 1, 2022. Previously reported credits may still be claimed under the credit redemption schedule.
What you'll need
- Your 2021 Form 306, including the credit amount on Line 11.
- Copies of documents verifying payment of each tax amount claimed for the current taxable year. Enclose these with Form 306D.
- Payment details for each qualifying state tax: taxpayer name, FEIN or SSN, tax type, administering state agency, payment dates, tax period, and amount paid.
- Your income tax return information, including other credits claimed that have a higher priority.
- Additional pages with tax payment details if you are reporting more than five taxes.
If you receive the credit through a pass-through entity, the entity must give you a copy of its Form 306D to enclose with your return and a Schedule VK-1.
How to file
The text does not provide general mailing or e-filing directions for an individual or corporation filing Form 306D. It does provide these directions for pass-through credits:
- Shareholders, partners, and members must enclose a copy of the entity's Form 306D with their returns.
- Pass-through entities distributing the credit must give each recipient a Schedule VK-1.
- A partnership or limited liability company distributing the credit must also send a copy of the partner or member information directly to:
Virginia Department of Taxation
ATTN: Coalfield Employment Enhancement Tax Credit Distribution
P.O. Box 5126
Richmond, Virginia 23220-0126
This information must be sent within 60 days of making the distribution. This address is specifically provided for the distribution information, not as a general Form 306D filing address.
Common mistakes
- Including ineligible taxes. Do not include federal or local taxes, prior-year taxes, additions to tax, penalties, or interest.
- Including taxes collected from others. Employer withholding and retail sales tax paid by your customers do not qualify. Qualifying taxes must have been incurred and paid by you.
- Applying the credit in the wrong order. Apply it first against income tax, then against other qualifying Virginia state taxes. When listing income tax, subtract other credits claimed that have a higher priority.
- Leaving out payment proof or extra pages. Enclose documents verifying each amount claimed. If you list more than five taxes, include additional pages and enter their total on Part I, Line 7.
- Entering an email address when you do not want email communications. Providing an email address gives consent for the Virginia Department of Taxation to email you about this credit application.
Questions people ask
Which year's credit can I claim on the 2024 return?
The credit earned and reported for 2021 is claimable for 2024. Enter 100% of the amount from your 2021 Form 306, Line 11, on Form 306D, Part II, Line 1.
Can I receive a refund if my credit exceeds my qualifying taxes?
Yes. After the credit offsets income tax and other qualifying Virginia state taxes, 85% of the remaining credit is refunded to you. The other 15% goes to a regional economic development fund administered by the Virginia Coalfield Economic Development Authority.
Where do I report the credit on my credit schedule?
Use Schedule CR for individuals or Schedule 500CR for corporations. Transfer Form 306D, Part II, Line 1 to Section 3, Part 1, Line A of the applicable schedule. If Part II, Line 1 is less than Line 2, transfer the allowable credit from Line 3 to Line B. Transfer any allowable excess credit from Part II, Line 5 to Line C.
Where can I get help?
Call (804) 367-8031 for individuals or (804) 367-8037 for businesses. Forms and additional tax information are available at www.tax.virginia.gov.