I just found out I'm in the Enterprise Zone -- can I apply for credits retroactively? Yes and no. It depends on the credit. The Business Expense Deduction and Net Operating Loss Carry-Over must be claimed on the original tax return and cannot be changed. Can I take Enterprise Zone Tax Credits off my federal return? No. Enterprise Zones are state designations and therefore tax credits apply only to state taxes. Can I do my own hiring and still take the hiring tax credit? Yes, you can recruit and hire workers on your own. The hiring voucher must be submitted to the EZ Manager who will then determine whether your new employees meet the criteria to qualify for tax credits. What if an employee who qualified for the tax credit leaves my company? If you terminate an employee during the first 270 days of employment, you must recapture the amount of credit attributable to that employee's wages. However, this does not apply if the employee leaves voluntarily, becomes disabled, or is fired for misconduct. It also does not apply if you have a net increase in the number of qualified employees and their hours worked, or if the termination was due to a substantial reduction in your operations. If my tax credits exceed the tax imposed on my business, will I receive a tax refund? No. Your tax credits can't be applied toward a tax refund. However, you can claim surplus credits in succeeding years. Can I voucher retroactively? Yes, but it depends. Although there is nothing in state law that prohibits retroactive vouchering, neither is it required. Generally, retroactive vouchering can go back one year from the date of hire. In any case, retroactive vouchering will be based on the eligibility criteria of the worker and the applicable enabling legislation (contact the EZ Manager for additional information). How do I qualify? All businesses located within the Enterprise Zone automatically qualify for benefits whether they are proprietorships, partnerships or corporations. There are no special fees or applications required to qualify for benefits. Can a business running in the red still get benefits? Yes, using the Net Operating Loss Carry-Over, you can deduct this year's losses against future profits. Can my employees receive a tax credit? Yes. An incentive is available only to employees who work in a designated enterprise zone. Employees may claim a tax credit to reduce the amount of their income tax on wages earned in an enterprise zone (Form FTB 3553, Enterprise Zone Employee Credit). What items qualify for sales tax credits? Items that qualify include machinery and machinery parts used to manufacture, process or fabricate products. This includes machinery used to produce renewable energy resources or control air or water pollution. Who can use the net interest deduction to lenders? Banks and lending institutions, as well as individuals, can use this benefit, which is good for the life of the Zone.
DISCLAIMER: Facts and circumstances vary from business to business. Please consult your tax professional about your particular situation.