California Jobs Tax Credit
California businesses with 20 or fewer employees should be aware that the state provides a $3,000 tax credit for each additional full-time employee hired during 2009. The credit applies to hourly wage employees averaging at least 35 hours per week and full-time (at least 40 hours per week) salaried employees. An employer will not qualify for the credit unless it has a net increase in full-time employees compared to its number of full-time employees for 2008.
An employer which did not have any California activities before 2009 can still qualify for the credit. Anti-double counting rules prevent claiming the credit for employees in enterprise zones, manufacturing enhancement areas, military base recovery areas, targeted tax areas, or whose wages are included in calculating any other California tax credit.
The state budget has allocated a total of $400 million to the new jobs tax credit. The credit is awarded on a first-come-first-served basis by filing a credit claim form as part of the employer's California tax return for its tax year beginning on or after January 1, 2009. Since tax returns for calendar year 2009 cannot be filed before January 1, 2010 (even the 2009 forms are not expected to be available before December 2009), employers who wish to claim the credit should be prepared to file their returns as soon as possible after January 1, 2010.
Further information is available from the California Franchise Tax Board's website.
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