California Hiring Tax Credits and Your California Corporation

Although times are tough all around the country, they are particularly stringent in a handful of states, one of which is California. If you own a company in California, you will be pleased to learn that there are California hiring tax credits available that can lead to several thousands of dollars being eliminated from your annual tax bill. Although many companies do not take advantage of them, the California hiring tax credits have the potential to save your company a significant amount of money.

Which companies qualify for California hiring tax credits?

Depending on the specific California tax incentives you might be looking at, there are some general qualifications that corporations must meet in order to earn these California tax incentives. If your company is located within one of the state's forty-two Enterprise Zones and you hire employees who reside in the Zones and meet other criteria, then you qualify for California hiring tax credits. Enterprise Zones are located in areas that the state has identified as economically challenged, and thus to improve the local economies, the state provides these Enterprise Zone credits to qualifying companies.

Which employees would qualify my company for these California tax incentives?

There are several groups that have been targeted that would help your California company be able to claim Enterprise Zone credits, as well as the WOTC California, or the Work Opportunity Tax Credit. Generally speaking, the groups include those on public assistance, qualified youth and veterans, although other employees may qualify as well. When you hire employees from any of these groups, your company will then qualify to receive Enterprise Zone credits and WOTC tax credit.

How much are these California tax incentives worth to my California-based company?

The amount of credit will depend on the specific tax incentive and the number of qualified employees that your corporation hires. However, the WOTC California credit can earn your company up to forty percent of your employee's first-year wages up to $6,000, with youth hires having a cap of $3,000, and both groups meeting minimum hours worked. Those employees who were on long-term family assistance and whom you have given work for 180 days or 400 hours can allow you to deduct forty percent of the first year's wages up to $10,000, and up to fifty percent of the next year's wages. Furthermore, the tax credits may be claimed for two years, and can be carried forward for twenty years or backward for one year if needed.

How can I learn more about these and other California business credits?

Your best source for tax credit information is to contact a certified public accountant in California who routinely deals with hiring tax credits for companies.

Susan Slobac is a consultant in the tax credit industry. Susan writes about trends in California hiring tax credits & California tax incentives.