California corporations are looking for ways to make ends meet in today’s tough economy, but there is hope. There are state tax credits that California companies can take advantage of that will allow them to save money. One of the most popular is WOTC California, or Work Opportunity Tax Credit California. Surprisingly, many companies located in California do not take advantage of these and other tax credits allowed under the law, but if they do, they may be shocked to learn just how much it can save them at tax time.
The WOTC tax credit was put into place so that employers would hire people in certain demographic groups, and they would then get the reward of a WOTC tax credit. Employees who would qualify include those on public assistance. This can include those receiving Temporary Assistance to Needy Families, younger food stamp recipients, those on Supplemental Security Income, and those on long-term family assistance. Others who qualify are veterans. Veterans receiving food stamps or disabled veterans may qualify your company for WOTC California when they are hired by your corporation. Young people are also targeted by the WOTC tax credit. Young people age eighteen and up to forty years of age may be qualified if they are living in one of California’s forty-two Enterprise Zones, Renewal Communities or Rural Renewal Counties, which are targeted locations that need economic development. Summer youth hires age sixteen through seventeen who reside in the aforementioned locations would allow your company to claim a California WOTC tax credit. Other employees who would qualify your corporation for the California WOTC tax credit include ex-felons under certain conditions and vocational rehabilitation referrals.
If your California company hires employees from any of these groups, you may then qualify for the work opportunity tax credit California. For each employee except summer youth hires and those on long term family assistance, your company may claim California hiring tax credits of forty percent of the employee’s first year wages up to $6,000, with the condition that the employee is given a minimum of 400 hours of work. Summer youth hires may earn your company up to $3,000, and those qualifying for long term family assistance would allow your company to claim California hiring tax credits of forty percent of the first year’s wages up to $10,000, and fifty percent of the second year’s wages, with the condition that the employee works at least 400 hours or 180 days. Your company can claim the WOTC California for two years, and if needed, you can carry your work opportunity tax credit California forward for twenty years or make it retroactive for one year.
For more information about applying WOTC California to your corporation, you will want to contact a CPA experienced with hiring tax credits.
