NEW JOBS TAX CREDIT
PURPOSE OF BULLETIN
To inform staff that Senate Bill X3 15 enacted Revenue and Taxation Code §17053.80 and 23623. For taxable years beginning January 1, 2009, businesses with 20 or less employees are allowed a credit of $3,000 for each additional full-time employee they hire during the year.
- The credit is not subject to the 50 percent limitation for business credits.
- The total amount of credit available to be claimed by all taxpayers is $400 million.
- We will determine when the $400 million will be reached, and will announce that only returns filed by the last day of the calendar quarter, in which the limitation will be reached (cut-off date) will qualify to claim the credit.
- The credit must be claimed on a timely filed original return received by us on or before the specified cut-off date.
- Taxpayers who claim the credit on their original return that is received after the cut-off will be notified that the credit was denied.
- Taxpayers that are denied as a result of the $400 million limit 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.
An employer will qualify for the credit if:
- Each qualified full-time hourly employee is paid wages for at least an average of 35 hours per week.
- Each qualified full-time salaried employee was paid compensation during the year for full-time employment within the meaning of Labor Code Section 515.
- On the last day of the preceding taxable year, they employed 20 or less employees.
- There is a net increase in qualified full-time employees compared to the number in the prior taxable year.
Note: For taxpayers who do business in California for the first time during the tax year, the number of qualified full-time employees in the prior year would generally be zero, unless certain special rules apply.
An employer may not claim the credit for those employees who are any of the following:
- Certified as a qualified employee in an enterprise zone
- Certified as a qualified disadvantaged individual in a manufacturing enhancement area or targeted tax area.
- Certified as a qualified disadvantaged individual or qualified displaced employee in a local agency military base recovery area.
- An employee whose wages are included in calculating any other credit allowed.
The New Jobs Tax Credit will be available on the 2009 Personal Income and Business Entity tax returns.
Taxpayers can visit ftb.ca.gov, and search for New Jobs Tax Credit. They may also call us at 800.852.5711, Monday through Friday 7:00am to 6:00pm.