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Tax News Small Business

New Jobs Credit Still Available

There is still time for qualified businesses to claim the New Jobs Credit. California allocated $400 million for this tax credit. As of July 17, 2010, the cumulative total amount of New Jobs Credit generated on personal income tax and business entity tax returns filed and processed is $30,250,693. Business entities include C corporations, S corporations, limited liability companies, and partnerships.

This credit is allocated on a first come, first served basis up to $3,000 for each additional full-time qualified employee. To claim the credit on a 2009 personal income tax or business entity tax return, use Form 3527, New Jobs Credit. The cut-off date is the last day of the calendar quarter in which we estimate that qualifying claims will total $400 million. Qualifying claims must be made on original, timely filed returns.

By Tuesday of each week, we update our webpage to show the prior week ending cumulative totals.

An employer will qualify for the credit if:

  • Each qualified full-time hourly employee is paid wages for not less than an average of 35 hours per week.
  • Each qualified full-time employee that is a salaried employee was paid compensation during the year for full-time employment within the meaning of Section 515 of the Labor Code.
  • On the last day of the preceding taxable year, they employed a total of 20 or fewer employees.
  • There is a net increase in qualified full-time employees compared to the number of qualified full-time employees employed in the preceding taxable year. For taxpayers who first commence doing business in California during the taxable year, the number of full-time employees employed in the preceding year would be generally zero, unless certain special rules apply.

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.

For more information, visit the New Jobs Credit Frequently Asked Questions webpage and see the instructions included with Form 3527. You can also call us at:

  • 800.852.5711 from within the United States
  • 916.845.6500 from outside the United States (not toll-free)

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