Hiring Tax Credits

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Hiring Tax Credits IncentivesResources to
save you money

• Presented by Khanh Chau, MBA, BS
• Business Services Representative, NRC
• Oct 28, 2010 - Alameda, CA

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Hiring Tax Credits

• Federal hiring tax credits
• New Hire Act
• Work Opportunity Tax Credits WOTC
• State, County, City hiring tax credits
• California New Job Credits for Small Businesses
• California Enterprise zone Hiring Tax Credits
• and Business Incentives
• Oakland Enterprise zone
• Other Business Resources
• Sources

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Hiring Tax Credits

• Hiring tax credits are available from
• Current Federal Tax Credits Stimulus money.
• Current State Business Incentives Stimulus
  money
• Take advantages of the short-term hiring tax
  credits from stimulus money BEFORE THEY EXPIRE.
• Access to resources and current business
  incentives and hiring tax credits to REDUCE
  YOUR BUSINESS COSTS.

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Federal hiring tax credits
Stimulus
Current Federal Tax Credits
Stimulus
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Stimulus - New HIRE Act

• The new HIRE Act, enacted March 18, 2010
• valid until Dec 31, 2010.
• Payroll tax exemption Employer may be
• exempt from 6.2 of share of social
  security
• tax on wages paid to qualified employees,
• effective for wages paid from March 19,
  2010
• through December 31, 2010.
• New hire retention credit Employer may claim an
  additional new hire retention credit, up to
  1,000 for each qualified employee you keep as an
  employee for at least a year and whose wages
  are not significantly reduced in the second half
  of the year.

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Stimulus - New HIRE Act

• Qualified employers
• Small or large business
• Tax-exempt organization
• Public college or university
• Indian tribal government or farmer
• Exception household employers, governmental
  employers, other than public colleges,
  universities
• do not qualify.
• Qualified employees
• Beginning employment with you after Feb 3, 2010
  and before Jan 1, 2011.
• Who were either unemployed or worked 40 hours or
  less during the previous 60 days.

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New HIRE credits - How to apply?

• Must get a form W11 or similar
• signed affidavit by new hires
• before beginning employment.
• New employees certify they
• were not employed for more
• than 40 hours during the 60 days.

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Work Opportunity Tax Credit WOTC

• WOTC program was created by the Small Business
  Job Protection Act of 1996.
• The Small Business Work Opportunity Tax Act of
  2007 extends the WOTC Tax Credit through August
  31, 2011.
• Purposes
• To promote the hiring of individuals who qualify
  as a member of a target group.
• To provide a federal tax credit to employers who
  hire these individuals.

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WOTC Qualifying Target Groups
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WOTC Qualified Target groups (cont.)
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WOTC - How much you can save?

• Employers may qualify for a tax credit of up to
  9,000 if the employee is a member of a target
  group.
• Quick facts
• 2,400 for each new adult hire
• 1,200 for each new summer youth hire
• 4,800 for each new disabled veteran hire
• 9,000 for each new long-term family assistance
  recipient hired over a two-year period.

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WOTC - How much can I save?

• Target groups A through H
• 120-400 hours 25 of up to 6,000 in qualified
  wages for a maximum credit of 1,500
• 400 hours 40 of up to 6,000 in qualified
  wages for a maximum credit of 2,400.
• Target group I
• 40 of up to 10,000 in qualified first year
  wages for a maximum of 4,000
• 50 of up to 10,000 in qualified second year
  wages for a maximum of 5,000.
• Disabled Veteran Tax Credit
• The qualifying wage for disabled veteran is
  12,000, which provides employers a maximum tax
  credits of 4,800.

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WOTC - How do I apply?

• 2 forms you will need to complete with your new
  employee
• ETA 9601(or 9602) Individual Characteristics
  form must be completed on or before the applicant
  is offered employment.
• IRS 8850 Prescreening Notice and Certification
  Request must be submitted to the EDD
• NO LATER THAN THE 28TH DAY
• AFTER THE APPLICANT STARTS WORK.

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WOTC - How do I apply? (cont.)

• In California, EDD processes all requests for
  WOTC certifications for California employers.
  Mail forms to
• EDD WOTC CENTER
• 2901 50TH Street
• Sacramento, CA 95817
• The WOTC Center will send you a Work Opportunity
  Tax Credit Certification if the applicant is
  qualified.

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California State, County, City Hiring Tax Credits
Stimulus
Ongoing business incentives
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California New Job Credits for Small Businesses
Stimulus

• A new tax credit of up to 3,000 for each
  additional full-time employee hired is available
  to qualified small businesses.
• The total amount of credit available to be
  claimed by all taxpayers is capped at 400
  million.

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California New Job Credits for Small Businesses
Stimulus

• To qualify
• Effective January 1, 2009, any small businesses
  with 20 employees or less, not located in the
  Enterprise Zone that adds one or more full time
  positions .
• Each qualified full-time hourly employee is paid
  wages for not less than an average of 35 hours
  per week.
• Each qualified full-time salaried employee is
  within the scope of Section 515 of the Labor
  Code.

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California New Job Credits for Small Businesses
Stimulus

• Exception
• 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.
• 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.

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California New Job Credits How Do I apply?

• No need to apply for California New Job Credits
• Just claim the credit on a 2009 Personal Income
  Tax or Business Entity Tax Return using Form 3527
  - New Jobs Credit.
• Source http//www.ftb.ca.gov/businesses/New_Jobs_C
  redit.shtml

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California Hiring Tax Credits Business
Incentives - Enterprise Zone
42 enterprise zones in California http//www.caez.
org
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How Can the Enterprise Zone Benefit You?
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California Enterprise Zone Qualified Group
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Enterprise Zone Target Employment Area Address
locator

• To locate Map Street range of Enterprise Zone
  Target Employment Area TEA http//www.hcd.ca.gov/f
  a/cdbg/ez/enterprise/newmap.html
• Final determination of zone eligibility rests
  with the Department of Housing and Community
  Development.

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More Business Resources Tax Incentives

• Federal
• The Stimulus Package Tax Cuts for Businesses
• Energy efficiency Renewable energy tax credits
• COBRA Health Insurance Continuation Premium
  Subsidy
• Section 179 accelerated depreciation
• Disabled Access Credit
• Architectural Transportation Tax Deduction

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More Business Resources Tax Incentives

• California
• California currently has four types of Economic
  Development Areas (EDAs)
• Enterprise Zones (EZs)
• Local Agency Military Base Recovery Areas
  (LAMBRAs)
• Manufacturing Enhancement Areas (MEAs)
• The Targeted Tax Area (TTA)

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California Renewal Communities, Empowerment
Zones, Enterprise Communities (RC /EZ /Ecs)

• Designed to encourage businesses to open, expand,
  and to hire local residents.
• Incentives for eligible businesses of all sizes
  in Empowerment Zones and Renewal Communities.
• Employment credits
• 0 tax on capital gains
• Increased tax deductions on equipment
• Accelerated real property depreciation,
• Other incentives.
• California RC /EZ /ECs Frenos, Log Angeles,
  Santa Ana, San Diego, San Francisco, Orange Cove,
  Parlier, and the counties of Imperial
  Riverside.

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Oakland Enterprise Zone
Oakland Enterprise Zone is one of the largest
urban zones in CA Consider to start or expand
your business in Enterprise zone
ww.ezoakland.com call [phone])
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Local Business Resources

• Alameda One Stop Business Career Center.
• West Alameda Business Association
• East Bay Works
• East Bay Economic Development Alliance EDA
• We will keep you updated with new business
  incentives and tax credits.

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California Enterprise ZoneAddress Locator
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California New Job Credits for Small Businesses
Stimulus

• A new tax credit of up to 3,000 for each
  additional full-time employee hired is available
  to qualified small businesses.
• 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.

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Local Business Resources

• San Francisco
• Clean Technology payroll tax exclusion
• Biotechnology payroll tax exclusion
• Film production incentives
• Alameda County Subsidized Employment programs
  expired September 30, 2010

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Empowerment Zones and Renewal Community Area

• Designed to encourage businesses to open, expand,
  and to hire local residents.
• Incentives for eligible businesses of all sizes
  in Empowerment Zones and Renewal Communities.
• Employment credits
• 0 tax on capital gains
• Increased tax deductions on equipment
• Accelerated real property depreciation,
• Other incentives.

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Empowerment Zones Renewal Community Area -
Address Locator

• To find a business address or a new hire live in
  mpowerment Zone and Renewal Community Area
• Visit Address Locator at the US Department of
  Housing and Urban Development http//egis.hud.gov/
  egis/cpd/rcezec/ezec_open.htm
• Enter the street address and zip code, you will
  get a report if the address is located on the
  EZ/RCA
• Final determination of zone eligibility rests
  with the Department of Housing and Community
  Development.

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Sources

• http//www.business.ca.gov/Portals/
• http//www.hcd.ca.gov/fa/cdbg/ez/
• http//www.caez.org
• www.ezoakland.com
• http//eastbayworks.com http//www.edd.ca.gov/Jobs
  _and_Training/http//www.ftb.ca.gov/businesses/New
  _Jobs_Credit.shtml
• http//www.hcd.ca.gov/fa/cdbg/ez/enterprise/newmap
  .html
• http//www.eastbayeda.org/business_resources_incen
  tives/index.asp

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