Reservations Open Nov. 1 for CA's Main Street Tax Credit II

October 20, 2021

 

As part of California’s Assembly Bill (AB) 150, the Main Street Small Business Tax Credit II is a follow-up from Senate Bill 1447 from 2020, which allows a small business hiring credit against California state income taxes or sales and use taxes to certain California qualified small business employers that receive a credit reservation. The update to the bill provides financial relief to qualified small businesses for the economic disruptions in 2020 and 2021 that have resulted in unprecedented job losses. With this credit, taxpayers will be able to use the credit against income taxes, or they can make an irrevocable election to apply the credit against sales and use taxes.

Beginning at 8:00 a.m. 11/1/2021 through 11/30/2021, qualified California small business employer taxpayers can make reservations for the credit on the California Department of Tax and Fee Administration’s (CDTFA) website

It’s important to note that these credit reservations will be awarded on a first-come, first-served basis— we urge you to apply early.

 

Highlights of the Tax Credit

  • The application window is from 11/1/21-11/30/21.
  • Qualified small business employers can apply to reserve $1,000 per net increase in qualified employees, not to exceed $150,000.
  • The credit offsets either CA income tax or sales tax.
  • Tentative credit reservation amounts will generally be reduced by credit amounts reserved or received under the first Main Street Small Business Tax Credit.
  • Reservations can be made even if the taxpayer will claim the credit against their personal income tax or corporation franchise tax liability.

 

Small business qualification criteria

qualified employee is an employee who is paid qualified wages by a qualified small business employer. Qualified wages are wages that are paid to qualified employees for services performed in the State of California for a qualified small business employer. Finally, a California qualified small business employer is a taxpayer who meets the following criteria:

  • Must employ 500 or fewer employees as of December 31, 2020
  • Must have started your business prior to 2020, to qualify for these credits
  • Must have experienced a decrease of 20% or more in income tax gross receipts (generally, all income less returns and allowances) and will be determined by comparing (for calendar year income tax filers):
    • 20% drop in revenue comparing January 1, 2020, through December 31, 2020, to January 1, 2019, through December 31, 2019
      • Note: Special rules apply for businesses that started in 2019.
    • The increase in average monthly full-time equivalent employees (FTEs) from 4/1/20-6/30/20 compared to lesser of 7/1/20-6/30/21 or 4/1/21-6/30/21

Small business owners still have much to consider regarding specifics of qualifications, definitions, new or rehired qualified employees, and previously elected claims on the first Main Street Tax Credit. All this and more is detailed on the California Department of Tax and Fee Administration’s FAQ page

You can count on GC to guide you in your businesses’ taxing decisions. Reach out to your CPA or email us at contactus@gccpas.net to find out how we can help you assess your qualification for this important tax credit.

 

 

200 West Roseburg Avenue
Modesto, CA 95350

(209) 527-4220 (phone)
(209) 527-4247 (fax)

https://www.grimbleby-coleman.com/resources/articles/275

×

Fill the form below and we'll contact you to schedule an appointment:

Denotes Required Fields
First Name
Last Name
Email
Phone
How can we help?

Our Commitment to Safety and Prevention of COVID-19

Dear friends and clients,

Thank you for putting your trust in us to provide your tax and advisory services. These are rare and unusual circumstances; but be assured, we are committed to providing continued services and support.

To lessen our societal impact, as well as to protect the well-being of you, our clients, and our team, we ask that the majority of our communications be electronic or over the phone.  

We strongly encourage you to use our electronic collaboration tools for securely scanning and sending tax documents and we have the necessary data security in place to ensure security and privacy. For details regarding our electronic collaboration tools, and specific instructions, click here. We are happy to assist in the set-up of any of these applications, if you have not used them in the past; contact our Admin team at the phone number or email below.

GC looks forward to normalizing our processes as soon as safety dictates. Be well and take care of yourselves, your community, and your loved ones. We are here for you professionally and personally, so do not hesitate to reach out.

All the Best,

Ian Grimbleby, President/CEO and Principal
Grimbleby Coleman CPAs
Certified Public Accountants, Inc.
(209) 527-4220
contactus@gccpas.net

 

Close