Hiring Tax Credits & Incentives; Resources to save you money

1. Hiring Tax Credits & Incentives;Resources to save you money Presented by Khanh Chau, MBA, BS Business Services Representative, NRC Oct 28, 2010 - Alameda, CA

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. 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.

4. Federal hiring tax credits Stimulus $$$ Stimulus $$$ Current Federal Tax Credits

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 taxon 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. 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. 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. 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. WOTC – Qualifying Target Groups

10. WOTC – Qualified Target groups (cont.)

11. 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.

12. 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.

13. 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.

14. 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.

15. California State, County, City Hiring Tax Credits Stimulus $$$ Ongoing business incentives

16. 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.

17. 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.

18. 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.

19. 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

20. California Hiring Tax Credits & Business Incentives - Enterprise Zone 42 enterprise zones in California http://www.caez.org

21. How Can the Enterprise Zone Benefit You?

22. California Enterprise Zone Qualified Group

23. 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.

24. 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

25. 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)

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. 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)

28. 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.

29. California Enterprise ZoneAddress Locator

30. 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.

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. 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.

33. 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.

34. 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/index.asp