Get ready to reserve 2021 Main Street Hiring Credit; new FAQs posted - Spidell

Get ready to reserve 2021 Main Street Hiring Credit; new FAQs posted


Taxpayers can reserve their 2021 Main Street Hiring Credit on the CDTFA’s website beginning at 8:00 a.m. on November 1, 2021. Reservations must be made with the CDTFA prior to November 30, 2021 (or earlier if the $70 million cap is reached prior to November 30, 2021), even if the taxpayer will claim the credit against their personal income or corporation franchise or income tax liability.

Credit reservations will be awarded on a first-come first-served basis.

The credit is available to small businesses (500 or fewer employees as of December 31, 2020) that experienced at least a 20% decline in gross receipts from 2019 to 2020, which also had a net increase in full-time equivalent employees from specified periods in 2020 to 2021.

The FAQs clarify:

  • A new or rehired qualified employee does not need to be on the qualified employer’s payroll for the entire qualifying period to count toward the “net increase” in qualified employees;
  • Employees who were laid off and then rehired can be counted toward the net increase in FTE equivalents;
  • Taxpayers that elected to claim their Main Street Hiring Credit I against sales and use taxes may elect to apply the Main Street Hiring Credit II against personal income or corporation franchise or income taxes, and vice versa; and
  • Unlike the Main Street Hiring Credit I, S corporations that elect to claim the credit against sales and use taxes will be allocated 100% of the reserved credit, rather than being limited to one-third of the reserved amount.

All the information required to reserve the credit is outlined at:

www.cdtfa.ca.gov/industry/main-street-small-business-tax-credit-II-AB150.htm#reserving-credit

The FAQs are available at:

www.cdtfa.ca.gov/industry/main-street-small-business-tax-credit-II-AB150.htm#faqs