The Main Street Small Business Tax Credit II provides qualified small business employers in California with COVID-19 financial relief by allowing them to offset their income taxes or sales and use taxes with the credit when filing returns.

According to the California Department of Tax and Fee Administration (CDTFA), “On November 1, 2021, the California Department of Tax and Fee Administration will begin accepting applications for tentative small business hiring credit reservation amounts through our online reservation system. Qualified small business employers must apply with the CDTFA for a credit reservation. The credit reservations will be allocated to qualified small business employers on a first-come, first-served basis. The reservation system will be available from November 1, 2021, through November 30, 2021. Qualified small business employers may apply to reserve $1,000 per net increase in qualified employees, not to exceed $150,000. Tentative credit reservation amounts will generally be reduced by credit amounts reserved or received under the first Main Street Small Business Tax Credit.”

Does my business qualify?
According to the CDTFA, “in order to qualify, your business must meet the following qualifications:
 

• • Employed 500 or fewer employees as of December 31, 2020.
  • Experienced a decrease of 20 percent or more in gross receipts reported to Franchise Tax Board (FTB) for income taxes and will be determined by comparing:

• • • For calendar year income tax filers:
      • Compare January 1, 2020, through December 31, 2020, to January 1, 2019, through December 31, 2019.

• • • For fiscal year income tax filers:
      • Compare gross receipts for fiscal year 2019-2020 to fiscal year 2018-2019, or

• • • • Compare average of gross receipts for fiscal year 2019-2020 and fiscal year 2020-2021 to gross receipts from fiscal year 2018-2019.

• • • For a taxpayer that started business in 2019:
      • Compare gross receipts for the period January 1, 2020, through February 28, 2020, multiplied by 1.5 to the gross receipts for the period April 1, 2020, and ending on June 30, 2020.

How much tax credit can my business claim?
The credit is calculated based on monthly, full-time equivalent qualified employees.  Give us a call today at (310) 424-9686 to see whether your business qualifies and how much you can claim.

This is a good opportunity for California businesses to obtain financial relief in the form of tax credits. Don’t wait, get in touch with us today.

*The information contained on this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, legal, or financial advice from a professional accountant.