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Introduction
SB 15 of the Third Extraordinary Session; Stats. 2009, Ch. 17
added R&TC Sections 17053.80 and 23623 operative for taxable
years beginning on or after January 1, 2009.
About the credit
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A new tax credit of up to $3,000 for each additional
full-time employee hired is available to small businesses
with 20 or less employees beginning January 1, 2009. The
credit is prorated on an annual full-time equivalent basis
for employees employed less than a full year.
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The credit is not subject to the 50% limitation for business
credits.
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The total amount of credit available to be claimed by all
taxpayers is capped at $400 million.
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The credit must be claimed on a timely filed original return
received by the Franchise Tax Board on or before a cut-off
date specified by the Franchise Tax Board.
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Taxpayers claiming the credit on an original return received
by the Franchise Tax Board after the cut-off date is met
will be notified that the credit has been denied.
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Taxpayers that have been denied the credit as a result of
the cut-off date being reached will not be assessed
an underpayment of estimated tax or underpayment of tax
penalty to the extent the underpayment was created or
increased by the disallowance of this credit.
To qualify
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An employer will qualify for the credit if:
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Each qualified full-time hourly employee is paid wages
for not less than an average of 35 hours per week.
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Each qualified full-time employee that is a salaried
employee was paid compensation during the year for
full-time employment within the meaning of
Section 515 of the Labor
Code.
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On the last day of the preceding taxable year, they
employed a total of 20 or fewer employees.
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There is a net increase in qualified full-time employees
compared to the number of full-time employees employed
in the preceding taxable year. For taxpayers who first
commence doing business in California during the taxable
year, the number of qualified full-time employees
employed in the preceding year would be generally be
zero, unless certain special rules apply.
Exceptions
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An employer may not claim the credit for those employees who
are any of the following:
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Certified as a qualified employee in an enterprise zone
or targeted tax area.
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Certified as a qualified disadvantaged individual in a
manufacturing enhancement area.
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Certified as a qualified disadvantaged individual or
qualified displaced employee in a local agency military
base recovery area.
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An employee whose wages are included in calculating any
other credit allowed.
Claiming the credit
Claim the credit on a 2009 Personal Income Tax or Business
Entity Tax Return using
Form 3527 - New Jobs Credit.
More information
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New Jobs Credit
Frequently Asked Questions
(Updated - 2/18/10)
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Check this page for any updated information regarding this
credit.
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See the instructions included with
Form 3527.
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Call us: 800.852.5711
from within the United States
Tax credit amounts (Updated - 11/27/10)
California allocated $400,000,000 for this tax credit. Taxpayers
may only claim the credit on an original timely filed return
received by the FTB on or before a cut-off date specified by
FTB. The cut-off date is the last day of the calendar quarter
within which FTB estimates it will have received timely filed
original returns claiming the credit that cumulatively total
$400 million.
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