California's New Jobs Credit

Is your company doing business in California?  For the 2009 tax year the state of California is offering a New Jobs Credit aimed at small businesses in California with 20 or fewer CA employees at the beginning of the tax year.  California is setting aside $400 million with which to provide businesses a $3,000 non-refundable credit for every full-time employee hired in California. 

The application for the credit will be sent in with your 2009 Personal Income Tax or Business Entity Tax Return on a form the California Franchise Tax Board has planned to release in December.  They have also said a cut-off date for the applications will be announced. 

Since the credit is capped at $400 million it will be awarded on a first-come, first-served basis.  However, those who are denied the credit due to the cap will not be assessed an underpayment of estimated tax/tax penalty to the extent that the underpayment was created by the disallowance of the credit. 

Some of the other terms and requirements to obtain the credit are below.

• The credit is not subject to the 50% limitation for business credits
• The credit can only be claimed for employees who are hired in excess of the amount of those employed in the prior tax year
• For taxpayers who first commence doing business in California during the taxable year, the number of qualified full-time employees in the preceding year is considered to be zero 
• More details regarding the stipulations for qualified employees and employers can be found at http://www.ftb.ca.gov/businesses/New_Jobs_Credit.shtml
  
  

Please let us know if you have or will have California operations and employees if you would like us to further review. Contact Feeley & Driscoll's Boston Accounting team, Email us or call 1 (888) 875-9770.

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