Hiring Tax Credits & Incentives; Resources to save you money Presented by Khanh Chau, MBA, BS Business Services Representative, NRC Oct 28, Alameda, CA

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 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.

Federal hiring tax credits Federal Hiring Tax Credits STIMULUS SOURCES Work Opportunity Tax Credit WOTC Up to $9,000 ONGOING CREDITS Architectural & Transportation Tax Deduction Up to $15,000 ONGOING CREDITS Disabled Access Credits Max up to $5,000 NEW HIRE ACT New Hire Payroll Tax Exemption Waive 6.2% of SS benefits by employers NEW HIRE ACT Retained New Hire Tax Credits Up to $1,000 Current Federal Tax Credits Stimulus $$$ Stimulus $$$

Stimulus - New HIRE Act The new HIRE Act, enacted March 18, 2010 valid until Dec 31, 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, 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 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, 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 The Small Business & Work Opportunity Tax Act of 2007 extends the WOTC Tax Credit through August 31, 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 Group A - B Group A : Qualified recipients of Temporary Assistance to Needy Families (TANF). Group B : Qualified veterans receiving Food Stamps or qualified veterans with a service connected disability. Group C - D Group C : Ex-felons hired no later than 1 year after conviction/release fr. prison. Group D: Designated Community Resident – an individual who has attained ages 18 but not 40 on the hiring date who reside in an Empowerment Zone, Renewal Community, or Rural Renewal County. Group E Group E: Vocational rehabilitation referrals, including Ticket Holders with an individual work plan developed and implemented by an Employment Network.

WOTC – Qualified Target groups (cont.) Group F Group F: Qualified summer youth ages 16 through 17 who reside in an Empowerment Zone, Enterprise Community, or Renewal Community ( see HUD - Address Locator to find out a youth lives in an EZ/EC/RC ) Group G-H Group G: Qualified Food Stamp recipients ages 18 but not 40 on the hiring date Group H: Qualified recipients of Supplemental Security Income (SSI). Group I Group I: Long-term family assistance recipients.

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: hours = 25% of up to $6,000 in qualified wages for a maximum credit of $1, 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.

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 28 TH 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 CENTER TH Street Sacramento, CA The WOTC Center will send you a Work Opportunity Tax Credit Certification if the applicant is qualified.

California State, County, City Hiring Tax Credits California Enterprise Zone hiring Tax Credits App. $37,000 in 5 years New Hire Tax Credits For Small Business $3000/new hire Alameda County Subsidized Employment Program 80% reimbursement of payroll tax 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.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 New Jobs Credit.Form New Jobs Credit Source tml

California Hiring Tax Credits & Business Incentives - Enterprise Zone 42 enterprise zones in California

How Can the Enterprise Zone Benefit You? State tax credit of $36,000 or more over five years for each qualified employee hired. HIRING TAX CREDIT Accelerated expense deductions for certain depreciable property. INCREASED EXPENSE DEDUCTION Up to 100 percent net operating loss deduction and a 15-year carry forward NET OPERATING LOSS CARRY FORWARD Net Interest Deductions for lenders on loans made to firms within an Enterprise Zone. NET INTEREST DEDUCTION FOR LENDERS Enterprise Zone companies can earn preference points on state contracts STATE PREFERENCE POINTS

California Enterprise Zone Qualified Group Group A CalWorks Group B WIA enrolled client Group C WOTC – Federal Work Opportunity Tax Credit Eligible individual Group D An economically disadvantages individual 14 years of age or older with low household family income Group E A qualified dislocated worker Group F * A disabled individual enrolled in/completed a state rehabilitation plan * A service-connected disabled veteran Group H An ex-offender convicted of a felony or misdemeanor punishable by incarceration or probation Group I An eligible recipient of SSI, AFDC, Food Stamp, State and Local General Assistance Group J Native American Indian/Samoan/Hawaii an or other Native American Descent Group K A resident of a Targeted Employment Area (TEA) at the time of hire

Enterprise Zone &Target Employment Area Address locator To locate Map & Street range of Enterprise Zone & Target Employment Area TEA html html Final determination of zone eligibility rests with the Department of Housing and Community Development.

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)

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.

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) )

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.

California Enterprise Zone Address Locator

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.

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

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.

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.

Sources /businesses/New_Jobs_Credit.shtml /businesses/New_Jobs_Credit.shtml