California New Hire Tax Credit by TCEDADocs

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									New Hire Tax Credit

A temporary tax incentive will target small businesses that
create new California jobs in the coming two years. This
credit is intended to complement existing job creation tax
credits the state offers to employers in geographically
targeted Enterprise and other zones:

In 2009 and 2010, California employers that began the year
with 20 or fewer employees will be able to claim a $3,000
income tax credit for each new, full-time employee they
hire.

Estimated to save small businesses $330 million in 2009-10
and help create thousands of jobs.

Ends the quarter after $400 million in credits have been
allocated.
New Jobs Credit

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

   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.
   The credit is not subject to the 50% limitation for business credits.
   The total amount of credit available to be claimed by all taxpayers is capped at $400 million.
   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.
   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.
   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.

Tax credit amounts (Updated - 9/07/10)
    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.

New Jobs Credit generated on returns filed and processed:

    The amounts below reflect the cumulative total amount of New Jobs Credit generated on
    Personal Income Tax (PIT) and Business Entity (BE) tax returns filed and processed as
    of the date indicated. Business entities include C Corporations, S Corporations, Limited
    Liability Companies, and Partnerships.

           As of     Total   Total PIT   Total    Total BE   Total Total PIT &
                       PIT   New Jobs       BE   New Jobs    PIT &          BE
                   returns      Credit returns      Credit      BE   New Jobs
                     filed: generated:   filed: generated: returns      Credit
                                                             filed: generated:
    02/27/2010         77     $328,599        320    $1,161,097        397    $1,489,696
    03/06/2010        124     $450,143        476    $1,834,721        600    $2,284,864
    03/13/2010        174     $655,664        749    $4,791,526        923    $5,447,190
    03/20/2010        260   $7,173,966      1,122    $6,557,560      1,382 $13,731,526
    03/27/2010        340   $7,493,159      1,212    $7,008,819      1,552 $14,501,978
    04/03/2010        436   $7,790,843      1,329    $7,574,301      1,765 $15,365,144
    04/10/2010        468   $7,902,480      1,456    $7,966,290      1,924 $15,868,770
     04/17/2010       905 $12,554,033      1,663    $9,041,549     2,568 $21,595,582
     04/24/2010       960 $13,058,664      1,694    $9,195,890     2,654 $22,254,554
     05/01/2010       982 $13,126,098      1,736    $9,390,035     2,718 $22,516,133
     05/08/2010     1,043 $14,249,467      1,756    $9,462,099     2,799 $23,711,566
     05/15/2010     1,134 $14,519,620      1,793    $9,659,267     2,927 $24,178,887
     05/22/2010     1,186 $14,804,499      1,847    $9,815,539     3,033 $24,620,038
     05/29/2010     1,219 $15,008,705      1,890 $10,156,473       3,109 $25,165,178
     06/05/2010     1,278 $15,159,614      1,936 $10,304,070       3,214 $25,463,684
     06/12/2010     1,335 $15,333,026      2,050 $11,067,346       3,385 $26,400,372
     06/19/2010     1,371 $15,428,530      2,128 $11,676,501       3,499 $27,105,031
     06/26/2010     1,390 $15,445,415      2,235 $13,879,736       3,625 $29,325,151
     07/03/2010     1,409 $15,480,653      2,280 $14,452,006       3,689 $29,932,659
     07/10/2010     1,422 $15,501,528      2,299 $14,558,815       3,721 $30,060,343
     07/17/2010     1,437 $15,582,797      2,314 $14,667,896       3,721 $30,250,693
     07/24/2010     1,443 $15,607,233      2,348 $14,874,137       3,791 $30,481,370
     07/31/2010     1,458 $15,714,069      2,373 $15,182,285       3,831 $30,896,354
     08/07/2010     1,466 $15,735,024      2,400 $15,298,354       3,866 $31,033,378
     08/14/2010     1,476 $15,766,911      2,423 $15,405,177       3,899 $31,172,088
     08/21/2010     1,485 $15,790,681      2,452 $15,590,658       3,937 $31,381,339
     08/28/2010     1,496 $15,847,868      2,492 $15,780,687       3,988 $31,628,555
     09/04/2010     1,512 $15,924,865      2,529 $15,977,494       4,041 $31,902,359

     We plan to update this webpage by Tuesday of each week to show the prior week
     ending cumulative totals.

To qualify

   An employer will qualify for the credit if:
    o  Each qualified full-time hourly employee is paid wages for not less than an average of 35
       hours per week.
    o 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.
    o On the last day of the preceding taxable year, they employed a total of 20 or fewer
       employees.
    o 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

   An employer may not claim the credit for those employees who are any of the following:
    o  Certified as a qualified employee in an enterprise zone or targeted tax area.
    o  Certified as a qualified disadvantaged individual in a manufacturing enhancement area.
    o  Certified as a qualified disadvantaged individual or qualified displaced employee in a local
       agency military base recovery area.
    o 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

   New Jobs Credit Frequently Asked Questions (Updated - 2/18/10)
   Check this page for any updated information regarding this credit.
   See the instructions included with Form 3527.
   Call us:
    o 800.852.5711 from within the United States
    o 916.845.6500 from outside the United States (not toll-free)

								
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