Hiring Tax Credits & Incentives;Resources to save you money

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

Hiring Tax Credits

Federal hiring tax credits

Current Federal Tax Credits

Stimulus $$$

Stimulus $$$

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.

Stimulus - New HIRE Act Qualified employers:

Small or large businessTax-exempt organizationPublic college or universityIndian tribal government or farmerException: 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.

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.

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.

WOTC – Qualifying Target Groups

WOTC – Qualified Target groups (cont.)

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.

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.

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 $1,500400+ hours = 40% of up to $6,000 in qualified wages for a maximum credit of $2,400.

• Target group I40% of up to $10,000 in qualified first year wages for a maximum of $4,00050% of up to $10,000 in qualified second year wages for a maximum of $5,000.

• Disabled Veteran Tax CreditThe qualifying wage for disabled veteran is $12,000, which provides employers a maximum tax credits of $4,800.

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.

WOTC - How do I apply? (cont.)

• In California, EDD processes all requests for WOTC certifications for California employers. Mail forms to :

EDD WOTC CENTER2901 50TH StreetSacramento, CA 95817

• The WOTC Center will send you a Work Opportunity Tax Credit Certification if the applicant is qualified.

California State, County, City Hiring Tax Credits

Ongoing business incentives

Stimulus $$$

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.

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.

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.

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_Credit.shtml

California Hiring Tax Credits & Business Incentives - Enterprise Zone

42 enterprise zones in Californiahttp://www.caez.org

How Can the Enterprise Zone Benefit You?

California Enterprise Zone Qualified Group

Enterprise Zone &Target Employment Area Address locator

• To locate Map & Street range of Enterprise Zone & Target Employment Area TEA http://www.hcd.ca.gov/fa/cdbg/ez/enterprise/newmap.html

• Final determination of zone eligibility rests with the Department of Housing and Community Development.

California Enterprise ZoneAddress Locator

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 credits0% tax on capital gainsIncreased tax deductions on equipmentAccelerated 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.

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 (510) 238-7794)

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

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)

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.

Local Business Resources

• San Francisco: Clean Technology payroll tax exclusionBiotechnology payroll tax exclusionFilm production incentives

• Alameda County Subsidized Employment programs expired September 30, 2010

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_incentives/

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