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New Employment Credit - Qualified Full-Time Employee Conditions and Examples of Acceptable Documentation

R&TC 17053.73/23626(b)(10)(vi)(I)-(V) provides that upon commencement of employment with the qualified taxpayer the individual must satisfy any of 5 conditions. Below are each of the 5 conditions and examples of documentation that may be acceptable.  To be relevant the documentation needs to support the condition and all requirements. In general, signed statements, affidavits or other statements by employees, without other evidence that a condition or requirement is met, will not be acceptable documentation. An employment application may contain information relevant to certain conditions or requirements, but generally the application alone will not constitute acceptable supporting documentation. The items listed below are examples of documentation that may be acceptable to establish that an employee meets one of the 5 conditions, and are not intended to be all inclusive. It is required by law that the documentation supporting the employee condition shall be retained by the taxpayer, and shall be provided to the Franchise Tax Board upon request.

The conditions

  1. Was unemployed for the six months immediately preceding employment with the qualified taxpayer. In the case of an individual who completed a program of study at a college, university, or other postsecondary educational institution, received a baccalaureate, postgraduate, or professional degree, and was unemployed for the six months immediately preceding employment with the qualified taxpayer, that individual must have completed that program of study at least 12 months prior to the individual’s commencement of employment with the qualified taxpayer.
  2. Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the qualified taxpayer.
  3. Was a recipient of the credit allowed under Section 32 of the Internal Revenue Code, relating to earned income, as applicable for federal purposes, for the previous taxable year.
  4. Is an ex-offender previously convicted of a felony.
  5. Is a recipient of either CalWORKs, in accordance with Article 2 (commencing with Section 11250) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code, or general assistance, in accordance with Section 17000.5 of the Welfare and Institutions Code.

Condition explanations

Condition 1

Element of condition/definition of element Acceptable documentation to prove element of condition

Unemployed for at least 6 months.

Unemployed means not in receipt of wages subject to withholding under Section 13020 of the Unemployment Insurance Code for that period and not a self-employed individual (within meaning of Section 401(c)(1)(B) of the Internal Revenue Code, relating to self-employed individual) for that period and not a registered full-time student at a high school, college, university, or other postsecondary educational institution for that period.

See below
Not in receipt of wages subject to withholding under Section 13020 of the Unemployment Insurance Code for that period.
  • A letter or document from EDD showing the individual's employment information for at least 6 months prior to hire
  • Proof of receipt of unemployment benefits for at least 6 months prior to hire
Not a self-employed individual (within the meaning of Section 401(c)(1)(B) of the Internal Revenue Code, relating to self-employed individual) for that period
  • A job application or resume showing work histories, notes from screening or interview questions etc.
Not a registered full-time student at a high school, college, university, or other postsecondary educational institution for that period
  • Employment application showing the individual is not a full-time student.
  • Notes from screening or interview questions etc.
  • Final transcript from a college, university, or other postsecondary education institution showing the last semester which the student attended the educational institution.
Completed a degree or course of study as defined at least 12 months prior to hire
  • Final transcript from a college, university, or other postsecondary educational institution showing the date the individual completed a degree or course study.
  • A dated copy of a diploma or certificate of course completion.

Condition 2

Element of condition/definition of element Acceptable documentation to prove element of condition
Is a veteran who separated from service in the Armed Forces of the United States within the 12 months preceding commencement of employment with the qualified taxpayer.
  • DD-214 Defense Department Report of Separation.
  • Veterans Administration documentation.
  • Report of separation or discharge from the armed services.
  • Veterans Administration documentation.
  • Verification by State Veterans Agency.

Condition 3

Element of condition/definition of element Acceptable documentation to prove element of condition

Was a recipient of the credit allowed under Section 32 of the Internal Revenue Code, relating to earned income, as applicable for federal purposes, for the previous taxable year. (Earned Income Tax Credit Recipient)

  • A copy of the individual's tax return (or a portion thereof) for the last tax return filed before the employee's commencement of employment.
  • A copy of the individual's EITC worksheet (or a portion thereof) for the last tax return filed before the employee's commencement date of employment.
  • A copy of an individual's tax return transcript which shows that the EITC was claimed for the last tax return filed before the employee's commencement of employment.

Condition 4

Element of condition/definition of element Acceptable documentation to prove element of condition

Is an ex-offender previously convicted of a felony.

  • Court documents showing the felony conviction.
  • Letter of parole.
  • Letter from probation officer.
  • A copy of a background check which shows the felony conviction and contains sufficient information to confirm the identity of the individual.
  • Other government document verifying ex-offender of a felony status, such as a letter from the Board of Prison Terms, or a letter from the Governor's Office.

 

Condition 5

Element of condition/definition of element Acceptable documentation to prove element of condition

Is a recipient of either CalWORKs, in accordance with Article 2 (commencing with Section 11250) of Chapter 2 of Part 3 of Division 9 of the Welfare and Institutions Code, or general assistance, in accordance with Section 17000.5 of the Welfare and Institutions Code.

See below

CalWORKs is a welfare program that gives cash aid and services to eligible needy California families. The program serves all 58 counties in the state and is operated locally by county welfare departments. If a family has little or no cash and needs housing, food, utilities, clothing or medical care, they may be eligible to receive immediate short-term help. Families that apply and qualify for ongoing assistance receive money each month to help pay for housing, food and other necessary expenses. 

  • A document issued by the local CalWORKS administrator stating that the employee was a recipient of CalWORKS.

 

The General Assistance or General Relief Program is designed to provide relief and support to indigent adults who are not supported by their own means, other public funds, or assistance programs. Each county's General Assistance or General Relief program is established by its own Board of Supervisors.

  • A written statement from the county office that administers these programs stating that the employee was a recipient of public assistance and/or other records (benefit printout etc.)