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Your Legal Corner - Client Alert Blog

New $3000 Jobs Tax Credit For California Small Businesses That Hire New Full Time Employees.

Written By: Melissa C. Marsh, Esq., California Attorney, June 2009 Add to Favorites
Beginning January 1, 2009, California employers with less than 20 employees may be able to take advantage of a $3000 Jobs Tax Credit for each new full time employee hired if the eligibility requirements discussed below are met. The jobs tax credit can be claimed on a 2009 personal or business tax return, and is $3000 for each additional full-time employee hired. An employer will not qualify for the credit unless there is a net increase in the number of individuals employed in 2008. If the business just started in 2009, then the number of employees for 2008 would be considered zero, and every new full time employee should qualify for the credit. The credit applies to hourly wage employees averaging 35 hours per week, and full time salaried employees (at least 40 hours per week). If the business had 10 employees in 2008, and 5 were laid off in January of 2009, the business would have to hire an additional 6 full-time employees to qualify for a single $3,000 tax credit.

A Small Business Employer with less than 20 employees will qualify for the credit if:

  1. Each qualified full-time hourly employee is paid wages for not less than an average of 35 hours per week.
  2. Each qualified full-time employee that is a salaried employee is paid compensation during the year for full-time employment within the meaning of Section 515 of the Labor Code.
  3. On the last day of the preceding taxable year (2008), the Small Business Employer employed a total of 19 or fewer employees. For Small Businesses who first commence doing business in California during 2009, the number of qualified full-time employees employed in the preceding year (2008) would be zero.
  4. There is a net increase in qualified full-time employees compared to the number of full-time employees employed in 2008, unless certain special rules apply.
A small business employer may not claim the credit for new hires that qualify for a different credit, including employees who are:
  • Certified as a qualified employee in an enterprise zone or targeted tax area.
  • Certified as a qualified disadvantaged individual in a manufacturing enhancement 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.
How To Claim the Credit.

The total amount of the credit available to taxpayers will be capped at $400 million. The FTB will determine when the cap has been reached and will set a cut-off date for claiming the tax credit. The tax credit must be claimed on a timely filed original return received by the FTB before the cut-off date. This cut-off date is defined as the last day of the calendar quarter within which the FTB estimates the $400 million limit will be reached. The cut-off date has not yet been determined.

Small Businesses can claim the credit on a 2009 Personal Income Tax Return, or Business Entity Tax Return, using the credit form for the New Jobs Tax Credit. The Jobs Credit Form will not be made available until December of 2009. However, since there is a cap of $400 million, small businesses seeking to claim the credit should be prepared to file their returns as soon as possible after January 1, 2010.

For more information, please call the FTB at 800.852.5711. If you qualify for the credit, or plan to take advantage of the Jobs Tax Credit, don't forget to get your 2009 Tax Return filed as soon as possible after January 1, 2010.

Tags: california, california jobs tax credit, jobs tax credit, tax, tax credits
Posted In: Business Law Bulletin  Corporate Client Bulletin  Employment Law News 

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.