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How Do I Take Advantage
of the Hiring Tax Credit?
- Your business must be in the Enterprise Zone geographic
area.
- You must hire a qualified
employee as defined by the California Enterprise Zone
Program regulations.
- Before you claim the tax credit on your tax return, you
must request a voucher for each qualified employee.
What is a Voucher?
A voucher (Form TCA EZ1) is a certification that states
that an employee meets all the eligibility criteria as defined
by the Franchise Tax Board. Only the Enterprise Zone Administrator
can issue vouchers for the City of San Jose Enterprise Zone
program.
How Can I Request a Voucher?
To request a voucher, businesses must provide two documents
to the San Jose Enterprise Zone Administrator.
- An
Enterprise Zone Voucher Application form, and
- Proof of employee eligibility
Mail or fax these completed documents to:
Enterprise Zone Program
Office of Economic Development
200 E. Santa Clara St. 17th Floor
San Jose, CA 95113
Fax: 408-293-9043
Phone: 408-795-1813
Who is a Qualified Employee?
Qualified employees are employees that work for an Enterprise
Zone business and were "Enterprise Zone Eligible" at the
time hired. The employee must perform at least 50% of their
work within the boundaries of the Enterprise Zone.
"Enterprise
Zone Eligible" is defined by any one of the following
criteria:
- A person enrolled or eligible to participate in activities
under the Cal Works program.
- A person enrolled in or eligible for WIA – Intensive
Service or Core B
- A member of a target group under WOTC- Federal Worker
Opportunity Tax Credit
- An economically disadvantaged individual 14 years of
age or older with low household family income.
- A qualified dislocated worker
- Clean Air Act Compliance
- Active Armed Forces or National Guard as of 9/30/90
- Seasonal Unemployed
- Long-term Unemployed
- Unemployed/Self employed Due To Economic Conditions
- DOD Civilian Employee at a Military Installation
- Terminated, Laid Off and Eligible for unemployment Insurance
(Unlikely to return to work in previous occupation/industry
- Plant, Company or Facility Closure
- A disabled individual eligible for, enrolled in, or
who completed a state rehabilitation plan
- A service-connected disabled veteran
- A Vietnam era veteran
- A recently separated veteran
- An ex-offender convicted of a felony or misdemeanor
punishable by incarceration or probation
- A recipient of the following public benefits:
- Federal Supplemental Security Income (SSI)
- Aid to Families with Dependent Children (AFDC)
- Food stamps
- State and local General Assistance (GA)
- Native American Indian, Native Samoan, Native Hawaiian
or other Native American descent
- A resident of a Targeted Employment Area (TEA) at the
time of hire
How Much Can I Save by Using the Tax Credit?
In the first year, a company can claim 50% of an employee's
wage. The company can claim 40% in the second year, 30% in the
third year, 20% in the fourth year and 10% in the fifth year.
There is a maximum wage allowance of 150% of the current minimum
wage rate; as established by the Industrial Welfare Commission.
As the minimum wage increases so does your tax credit.
This is an example for a business that hires an "Enterprise
Zone Eligible" person working 2,080 hours annually (40 hours
per week for 52 weeks). Calculations are based on the maximum
allowable wages of 150% of the state minimum wage rate of $8.00
as of January 1, 2008.
| Year |
Maximum Hourly Wage
(150% of min. wage) |
Hours |
Wages |
% of Wages available
for Credit |
Tax Credit |
| 1 |
$12.00 |
2,080 |
$24,960 |
50% |
$12,480 |
| 2 |
$12.00 |
2,080 |
$24,960 |
40% |
$9,984 |
| 3 |
$12.00 |
2,080 |
$24,960 |
30% |
$7,488 |
| 4 |
$12.00 |
2,080 |
$24,960 |
20% |
$4,992 |
| 5 |
$12.00 |
2,080 |
$24,960 |
10% |
$2,496 |
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Total Credit per Employee over 5 years
| $37,440 |
You can estimate your tax savings by using our Hiring
Tax Calculator. This example is intended as an illustration
only and not meant to serve as official rules. For official
rules, see State of California
Franchise Tax Board Publication 1047, "Guidelines for Enterprise
Zone Tax Credit" or call the Enterprise Zone Administrator
at 408.795.1813 for more information.
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