California Siskiyou County Enterprise Zone
Where’s The Money?
The majority of your new hires will probably qualify for this tax credit…
ARE YOU USING IT??
By Lynn Teuscher of Aiello-Goodrich-Teuscher
For the past year, there have been discussions about the Siskiyou County Enterprise Zone, but where’s the money? Fortunately, we have seen some of our clients significantly benefit from this new Enterprise Zone credits.
Let’s take a moment to review one of the methods our clients are using to reduce their California corporate and personal income taxes through the Siskiyou Enterprise Zone Hiring Credit.
First, you need to have hired a new employee after June 23, 2008, and the new hire must have lived in Siskiyou County for at least 30 days prior to employment; AND, your business must be located in the enterprise zone which is determined by the property parcel number your business is located on.
The hiring credit for the first 12 months of employment is calculated by taking 50 % of the employee’s hourly wage, up to $12 per hour of the employee’s wage.
Example: Sundance Maintenance (A sole-proprietorship) hires John Thumb on July 1, 2008 at $13 an hour to do landscape maintenance work. Sundance Maintenance ends up paying John Thumb for 8 weeks of work for a total of $4,160 (8 weeks x 40 hours x $13 per hour). The Siskiyou Enterprise Zone hiring tax credit would then be $1,920 (8 weeks x 40 hours x $12 per hour x 50%).
The hiring tax credit is used as a dollar for dollar reduction of State of California personal and corporate income taxes. The following is a table showing the credit percentage of wages that can be saved for an employee’s first 5 years of employment:
Year Credit %
1 50%
2 40%
3 30%
4 20%
5 10%
In the example above, Sundance Maintenance earned $1,920 in tax credits on $4,160 in wages paid. The $1,920 in California tax credits can be used to reduce the 2008 California income tax as low as zero, and any credits left over can be carried to future tax years.
A couple of months ago the rules were greatly enhanced and simplified on which new employees are eligible. These rules are retroactive to June 23, 2008. The eligibility went from a small selected group of workers to any resident of a targeted employment area (TEA). In most cases, your new hires will probably reside in Siskiyou County, which would qualify for the TEA.
Our office is currently trying to identify clients that would be eligible for the 2008 hiring credits under these new rules. The goal is to file amended income tax returns for eligible clients to get California refunds. We also want to address our clients regarding lowering their current California estimated tax payments or tax withholding if they expect to do more hiring in 2009.
There is money that can come back to you through the use of our California Siskiyou County Enterprise Zone.
Please call us if you have questions about the California Siskiyou County Enterprise Zone.
