Instructions For Idaho Form 55 - 2004
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2TC55004
09-21-04
Instructions For Idaho Form 55
GENERAL INSTRUCTIONS
Credit Limitations
The total credit allowed cannot exceed 3.25% of the net income
Form 55 is used to calculate the Idaho credit for qualifying new
of your trade or business in Idaho. If you earn or claim the
employees earned or allowed. Each member of a unitary group
credit for qualifying new employees, this credit and all other
that earns or is allowed the credit must complete a separate
income tax credits except for the credit for tax paid to other
Form 55.
states are limited to 50% of the tax after deducting the credit for
tax paid to other states. The promoter-sponsored event credit is
For tax years beginning on or after January 1, 2004, you may be
not subject to this limitation.
able to earn either a $1,000 credit or a $500 credit for a
qualifying new employee. You cannot earn both credits for the
Carryover Periods
same employee. The applicable credit rate depends on
The credit carryover is limited to three tax years. If the number
whether the new employee meets certain wage and benefit
of qualifying employees decreases during the carryover period,
criteria. If the new employee does not meet the criteria for
you must recompute the credit based on the reduced number
of qualifying employees to determine the correct amount of
either credit rate, you will not be able to claim the credit for that
new employee.
carryover.
SPECIFIC INSTRUCTIONS
Qualifying New Employee
"New employee" means a person who is subject to Idaho in-
Instructions are for lines not fully explained on the form.
come tax withholding and covered for unemployment purposes
under Idaho Code. The employee must work in your trade or
PART II. CREDIT AVAILABLE SUBJECT TO LIMITATION
business at least 20 hours per week and a minimum of nine
months during the tax year for which you are claiming the credit
Line 1. Determine the average number of qualifying employ-
to qualify.
ees during the tax year by adding the number of qualifying
employees reported for each month on your Idaho Employer
$1,000 Credit
Quarterly Unemployment Reports and dividing that sum by the
To qualify for the $1,000 credit, the new employee must meet
number of months of operation during the tax year.
both of the following criteria:
Line 2. Determine the average number of qualifying employ-
•
He must have received annual earnings at an average rate
ees during the three preceding tax years by dividing the total of
of $15.50 or more per hour worked; and
the average number of qualifying employees reported on your
•
He must have been eligible to receive employer provided
Idaho Employer Quarterly Unemployment Reports for each
coverage under an accident or health plan described in
preceding year by 3. If the business was in operation for less
Section 105, Internal Revenue Code (IRC).
than three tax years, use the number of tax years in operation.
To earn the $1,000 credit your business does not have to be a
Line 3. Determine the average number of qualifying employ-
revenue-producing enterprise.
ees during the preceding tax year by adding the number of
qualifying employees reported for each month on your Idaho
$500 Credit
Employer Quarterly Unemployment Reports and dividing that
If the new employee does not qualify for the $1,000 credit, you
sum by the number of months of operation during the preced-
may be able to claim the $500 credit. To qualify for the $500
ing tax year.
credit, the employee must have worked for you in a “revenue-
producing enterprise.” A "revenue-producing enterprise"
Line 4. No credit is allowed unless the number on this line
means an Idaho business that begins with a natural resource
equals or exceeds one. If it is more than one, the number is
and produces, assembles, fabricates, manufactures, or
rounded down to the nearest whole number.
processes a value-added product. Businesses involving
wholesale or retail sales, professional, managerial, repairs or
Line 5. If your trade or business in which the new employees
services generally do not qualify. Idaho businesses that
work does NOT qualify as a revenue-producing enterprise, you
consume a natural resource in a process, but do not add value
cannot claim the $500 on any new employees. Enter 0 on
to the natural resource, do not qualify.
line 5.
Calculating the Credit
If your trade or business qualifies as a revenue-producing
The Employer Quarterly Unemployment Insurance Tax Reports
enterprise, determine the number of new employees listed on
and the Unemployment Insurance Wage Reports filed with the
line 4 who do not qualify for the $1,000 credit and enter that
Idaho Department of Commerce and Labor are the basis for
number on line 5.
computing the number of employees. However, only those
employees who meet the definition of "new employee" can be
Line 6. Determine the number of new employees listed on line
included when computing the credit for qualifying new employ-
4 who meet the qualifications for the $1,000 credit. The employ-
ees. You must keep records to support the computation.
ee must have an annual average hourly wage rate of at
least $15.50 and have been eligible to receive employer
The number of qualifying new employees is the excess of the
provided coverage under an accident or health plan. Enter the
average number of qualifying employees during the tax year
result on line 6.
over the greater of the average number of qualifying employees
during the three preceding tax years or the average number of
Line 10. The credit is limited to 3.25% of the net income of
qualifying employees during the preceding tax year. The
your trade or business in which the new employment
number of qualifying new employees must be rounded to the
occurred. Enter on line 10 the amount of net income from
nearest whole number.
the proprietorship, farm, partnership, fiduciary or corpora-
tion income tax return that is from Idaho activities.
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