State and Local Tax – Something to think about… California Wildfire Credit

President Trump signed a Bill that provides a credit to certain California taxpayers located within the areas impacted by the recent California wildfires.  The bill is known as the Bipartisan Budget Act of 2018, H.R. 1892. The credit is similar in nature to the relief that was provided to eligible businesses affected by hurricanes Harvey, Irma, and Maria. The bill makes the implementation of the current wildfire credit easier to administer.

There are a number of qualifications that a business taxpayer must meet in order to obtain the credit.  First the taxpayer must be within a designated wildfire disaster zone.  The credit is limited to a business that was inoperable between October 8, 2017 and December 31, 2017.  The maximum credit is limited to $2,400 per employee that was not able to work due to the business’ closure.  A business can only claim either the wildfire credit or the Work Opportunity Tax Credit but not both credits for the same employee.  Finally, those employers that take advantage of the wildfire credit must reduce their deductions for wages by the amount of the credit.

For more information, please contact Mike Goral, Tax Partner at mgoral@squarmilner.com