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Business Hiring Tax Credits Oct 2010


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The presentation was developed to drive business and public\'s awareness to maximize the ongoing hiring tax credits and the stimulus $$ hiring tax credits, from both federal and state level.

Presentation aims to drive the job creations and boost the local economic growth through maximizing government resources and programs.

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Business Hiring Tax Credits Oct 2010

  1. 1. Hiring Tax Credits & Incentives; Resources to save you money
  2. 2. 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
  3. 3. Hiring Tax Credits
  4. 4. Federal hiring tax credits Stimulus $$$ Stimulus Current Federal $$$ Tax Credits
  5. 5. 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.
  6. 6. 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.
  7. 7. 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.
  8. 8. 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.
  9. 9. WOTC – Qualifying Target Groups
  10. 10. WOTC – Qualified Target groups (cont.)
  11. 11. 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 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.
  12. 12. 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.
  13. 13. 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.
  14. 14. 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.
  15. 15. 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.
  16. 16. California State, County, City Hiring Tax Credits Stimulus $$$ Ongoing business incentives
  17. 17. California New Job Creditsfor Small Businesses – Stimulus $$ • 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.
  18. 18. California New Job Creditsfor Small Businesses – Stimulus $$To qualify• Effective January 1, 2009, any small businesses with 20 employees or less, not located in the Enterprise Zone that adds one or more full time positions . Each qualified full-time hourly employee is paid wages for not less than an average of 35 hours per week.– Each qualified full-time salaried employee is within the scope of Section 515 of the Labor Code.
  19. 19. California New Job Creditsfor Small Businesses – Stimulus $$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.
  20. 20. 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 html
  21. 21. California Hiring Tax Credits &Business Incentives - Enterprise Zone 42 enterprise zones in California
  22. 22. How Can the Enterprise Zone Benefit You?
  23. 23. California Enterprise Zone Qualified Group
  24. 24. Enterprise Zone &Target Employment Area Address locator • To locate Map & Street range of Enterprise Zone & Target Employment Area TEA • Final determination of zone eligibility rests with the Department of Housing and Community Development.
  25. 25. California Enterprise Zone Address Locator
  26. 26. 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.
  27. 27. Oakland Enterprise ZoneOakland EnterpriseZone is one of thelargest urban zonesin CAConsider to start orexpand yourbusiness inEnterprise zoneww.ezoakland.comcall (510) 238-7794)
  28. 28. 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
  29. 29. 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)
  30. 30. 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.
  31. 31. 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
  32. 32. Sources••••••• .asp