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The federal government and tax law offer many incentives to employer to hire Native Americans. These incentives are in the form of an Indian Employment credit. To provide employers an incentive to hire Native Americans who live on or near an Indian Reservation, employers are given an Indian Employment Credit. There are many rules which must be followed in order to take the credit. For example, you must hire Native Americans who can prove their blood lines or enrolled members of certain tribes. There must be some sort of proof of enrollment status. Second, all services performed by the employee must be performed within an Indian reservation. Third, the employee must maintain his or her principal residence on or near the Indian reservation where the services are performed. These are only a few requirements in order to claim the Indian Employment Credit for federal tax purposes. The credit is a nonrefundable credit available to employers for wages and health insurance costs paid or incurred by the employer after January 1, 1994. However, California does not conform to the federal Indian employment credit. You can make an adjustment on Schedule CA of Form 540 or Form 540NR, line 12, line 17, or line 18, column B for any business expenses denied under federal tax law because the expenses used for the credit cannot be used for a double deduction for federal tax purposes.

A real estate professional closes real estate deals as his or her profession. The rules for passive activities cannot apply to them in the same manner as people who are not real estate agents or realtors. If you are in the business of selling property as a real estate professional, your tax situation will be different that those individuals who are not real estate professionals. Being a real estate professional makes your real estate activities not passive activities. To qualify as a real estate professional your services in real property trade or businesses in which you materially participated are more than half of the personal services you performed in all trades or businesses during the tax year and you performed more than 750 hours of services during the tax year in real property trades or businesses in which you materially participated. A person who participates is a real estate trade or business develops or redevelops real property, constructions or reconstructs real property, acquires or converts real property, rents or leases real property, operates, manages or brokers real property.

The above are the rules for real estate professionals to receive special tax treatment as professionals that are in the business real property for federal tax purposes. For federal tax purposes, rental real estate activities are not automatically considered passive activities. California does not conform to federal in this aspect of the tax law and these activities are automatically considered passive under California tax law. Use FTB Form 3801 to figure out which adjustments to make on Schedule CA of Form 540 or Form 540NR, line 12 or line 17. You must complete the California passive activity worksheet and the California adjustment worksheet to ease through the correct items to include as passive activities for your California tax return.

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