Here is the April 2009 edition of the FTB’s “Tax News” newsletter.
Of special interest is this section covering the new “New Jobs Tax Credit:”
A New Jobs Tax Credit is now available for employers beginning on or after January 1, 2009. The credit, which will be claimed on the 2009 tax return, is $3000 for each additional full-time employee for small businesses with 20 or less employees. This credit will not be subject to the 50 percent limitation for business credits.
The total amount of the credit available to taxpayers will be capped at $400 million. We will determine when the cap has been reached and will set a cut-off date for claiming the credit. The credit must be claimed on a timely filed original return received by us before the cut-off date. This cut-off date is defined as the last day of the calendar quarter within which we estimate the $400 million limit will be reached. The cut-off date has not yet been determined.
Taxpayers claiming the credit after the cut-off date will be notified that the credit is denied. If the credit is denied because the cap has been reached, taxpayers will not be subject to the underpayment of estimated tax penalty or underpayment of tax penalty to the extent that the underpayment was created or increased by the disallowance of the credit.
An employer will qualify for the credit if:
* Each qualified full-time hourly employee is paid wages for not less than an average of 35 hours per week.
* 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.
* On the last day of the preceding taxable year, they employed a total of 20 or fewer employees.
* 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 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 or targeted tax area.
* Certified as a qualified disadvantaged individual in a manufacturing enhancement area or a 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.
A new credit form is currently being developed and will be available by December 2009.