Fillable California Form 3527 - New Jobs Credit

Carryover

Annual Full-time Equivalent:

• In the case of a full-time employee paid hourly qualified wages, the

If the available credit exceeds the current year tax liability or is limited by

total number of hours worked for the taxpayer by the employee (not

tentative minimum tax, the unused credit may be carried over for eight

to exceed 2,000 hours per employee) divided by 2,000.

years or until the credit is exhausted, whichever occurs first. Apply the

• In the case of a salaried full-time employee, the total number of

carryover to the earliest taxable year(s) possible. In no event can the

weeks worked for the taxpayer by the employee divided by 52.

credit be carried back and applied against a prior year’s tax.

Acquire: Includes any gift, inheritance, transfer incident to divorce, or

If you have a carryover, retain all records that document this credit and

any other transfer, whether or not for consideration.

carryover used in prior years. The FTB may require access to these

records.

E Limitations

Specific Line Instructions

The credit is limited to $3,000 per qualified employee and is limited

further by being prorated on an annual full-time equivalent basis for

How many total employees, including both full-time and part-time, did

employees employed less than a full year.

you have on the last day of the prior taxable year? If more than 20,

This credit does not reduce any other deduction for qualified wages.

STOP, you are not eligible for this credit.

S corporations may claim only 1/3 of the credit against the 1.5% entity

Part I – Net Increase in Qualified Full-Time Employees

level tax (3.5% for financial S corporations). The remaining 2/3 must

be disregarded and may not be used as a carryover. S corporations can

Section A

pass through 100% of the credit to their shareholders. If a taxpayer

For line 4, line 7, and line 8 of Section A, enter the result as a decimal

owns an interest in a disregarded business entity [a single member

out to four decimal places.

limited liability company (SMLLC) not recognized by California, and for

tax purposes is treated as a sole proprietorship owned by an individual

Section B

or a branch owned by a corporation], the usable credit amount received

For line 12, line 15, and line 16 of Section B, enter the result as a

from the disregarded entity is limited to the difference between the

decimal out to four decimal places.

taxpayer’s regular tax figured with the income of the disregarded

entity, and the taxpayer’s regular tax figured without the income of the

If the amounts entered on lines 1, 3, and 6 of Section A, and lines 9, 11,

disregarded entity. An SMLLC may be disregarded as an entity separate

and 14 of Section B are negative, enter as negative.

from its owner, and subject to certain statutory provisions that recognize

Part II – Credit Computation

otherwise disregarded entities for certain purposes, for example:

Example: Company P employs two qualified full-time employees paid on

• The tax and fee of an LLC

an hourly basis. One employee worked 1,575 hours during the current

• The tax return filing requirements of an LLC

taxable year, and the other worked 1,000 hours.

• The credit limitations previously mentioned

The total amount of credit Company P may claim for both employees is

Get Form 568, Limited Liability Company Tax Booklet, for more

calculated as follows:

information.

Step 1: 2,575 hours

2,000 hours = 1.2875

This credit cannot reduce the regular tax below the minimum franchise

tax (corporations and S corporations), the annual tax (limited

Step 2: 1.2875 x $3,000 = $3,863

partnerships, limited liability partnerships, and LLCs classified as

Example: Company P also employs two qualified full-time employees

a partnership), the alternative minimum tax (corporations, exempt

paid on a salaried basis. One employee worked 35 weeks during the

organizations, individuals, and fiduciaries), the built-in gains tax

current taxable year, and the other worked 50 weeks. The total amount

(S corporations), or the excess net passive income tax (S corporations).

of credit Company P may claim for both employees is calculated as

This credit cannot reduce regular tax below the tentative minimum tax

follows:

(TMT). Get Schedule P (100, 100W, 540, 540NR, or 541), Alternative

Step 1: 85 weeks

52 weeks = 1.6346

Minimum Tax and Credit Limitations, for more information.

Step 2: 1.6346 x $3,000 = $4,904

This credit is not refundable.

Line 18 – Enter the total new jobs credit generated amount on Form 100,

F Disallowance of the Credit

line 25a; Form 100S, line 23a; Form 100W, line 25a; Form 109, line 11a;

Form 540, line 41; Long Form 540NR, line 56; Form 565, question EE; or

Taxpayers that have been denied the credit as a result of the $400 million

Form 568, question EE.

cap being reached will not be assessed an underpayment of estimated

Line 19 – If you received pass-through new jobs credit(s) from

tax or underpayment of tax penalty to the extent the underpayment

S corporations, estates or trusts, partnerships, or LLCs classified as

was created or increased by the disallowance of this credit. For more

partnerships, add the amounts and enter the total.

information, get form FTB 5805, Underpayment of Estimated Tax by

Line 22a – The amount of this credit you can claim on your tax return

Individuals and Fiduciaries, or form FTB 5806, Underpayment of Estimated

may be limited further. See General Information E, Limitations. Also,

Tax by Corporations. Additionally, any disallowance of the credit due to

refer to the credit instructions in your tax booklet for more information.

the $400 million cap being reached would be treated as a math error, and

Enter the amount of credit claimed on this line and on your current tax

would not be reviewable in any administrative or judicial proceeding.

return; Form 100, line 25b; Form 100S, line 23b; Form 100W, line 25b;

G Assignment of Credits

Form 109; line 11b; Form 540, line 42; Long Form 540NR, line 57; or

Form 541, line 23 and use credit code number 220.

Assigned Credits to Affiliated Corporations – For taxable years beginning

on or after July 1, 2008, credit earned by members of a combined

reporting group may be assigned to an affiliated corporation that is a

member of the same combined reporting group. A credit assigned may

only be claimed by the affiliated corporation against its tax in taxable years

beginning on or after January 1, 2010. For more information, get form

FTB 3544, Election to Assign Credit Within Combined Reporting Group,

or form FTB 3544A, List of Assigned Credit Received and/or Claimed by

Assignee or go to ftb.ca.gov and search for credit assignment.

Page 2 FTB 3527 2012

California Form 3527 - New Jobs Credit - 2012 Page 3

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