RPD-41388: RPD-41388 Certification of Eligibility for the Foster Youth Employment Tax Credit (2024)
New Mexico · New Mexico TRD · Used for tax years 2024
Form RPD-41388 certifies that an employee is a qualified foster youth in New Mexico and that the employer is eligible for the Foster Youth Employment Tax Credit. It records the employee’s qualification and employment information and calculates the credit for that employee.
Who files this form
Eligible employers applying for the New Mexico Foster Youth Employment Tax Credit use Form RPD-41388 to certify that an employee is a qualified foster youth and that the employer qualifies for the credit.
Attach a separate RPD-41388 for each qualified foster youth included in Form RPD-41389, Application for Foster Youth Employment Tax Credit.
To qualify:
- The foster youth must work at least 20 hours per week in New Mexico during the qualified employment period.
- The youth must meet the form’s age and legal-custody requirements. The definition covers individuals currently in qualifying legal custody or who were in custody within the seven years before the tax year for which the credit is claimed and were age 14 or older.
- Qualifying custody is with the Children, Youth and Families Department (CYFD), a New Mexico Indian Nation, Tribe or Pueblo, or the U.S. Department of the Interior Bureau of Indian Affairs division of Human Services.
- The youth must not have been employed by the taxpayer before the tax year for which the credit is claimed.
What you'll need
Gather the following:
- Form RPD-41389, Application for Foster Youth Employment Tax Credit.
- A separate Form RPD-41388 for each qualified foster youth.
- A copy of the foster youth employment certification described in the form, showing the date legal custody began.
- The employer’s name and New Mexico Business Tax Identification Number (NMBTIN), matching Form RPD-41389.
- The employee’s name exactly as it appears on the foster youth employment certification, hire date, qualified employment dates, and whether the employee worked for the employer in prior years.
- The employer’s tax-year dates and the number of employment days and tax-year days needed to calculate the credit.
Forms must be signed and dated. The Department may request additional documentation to verify eligibility.
After approval, use Form RPD-41390, Foster Youth Employment Tax Credit Claim Form, to claim the credit with the tax return.
How to file
- Complete Form RPD-41388 for each qualified foster youth. Complete the employment information and credit calculation, check the applicable certification boxes, and sign and date the form. Both eligibility certifications must be met.
- Attach each RPD-41388 and the required foster youth employment certification to Form RPD-41389.
- Submit the application and attachments to the Taxation and Revenue Department for approval before claiming the credit.
Email: BusinessCredit.Mgr@state.nm.us
Mail:
Taxation and Revenue Department
Attention: RPD Business Credit Unit
P.O. Box 5418
Santa Fe, NM 87502-5418
Once approved, attach Form RPD-41390 to the personal or corporate income tax return for the tax year in which you employ the qualified foster youth.
Common mistakes
- Leaving out a certification: Attach one RPD-41388 for each qualified foster youth, along with the required foster youth employment certification showing when custody began.
- Forgetting signatures or dates: The checklist requires signed and dated forms.
- Using inconsistent information: The employer’s name and NMBTIN must match Form RPD-41389. The youth’s name must exactly match the foster youth employment certification.
- Using an incomplete date format: The instructions call for a two-digit month and day and a four-digit year.
- Claiming the credit for a prior employee: If the youth worked for the employer before the tax year for which the credit is claimed, the employment does not qualify.
- Exceeding the employment limits: An employer cannot receive the credit for a youth for more than one calendar year from the hire date. Multiple employers cannot receive credits for more than one year combined for the same youth, and only one employer may receive the credit for that youth during a tax year.
- Claiming before approval: Submit the application and certifications for Department approval before claiming the credit.
Questions people ask
How much is the credit for each qualified foster youth?
The credit is up to $1,000 for wages paid to each qualified foster youth. For a qualified employment period shorter than a full tax year, divide the qualified employment days by the number of days in the employer’s tax year. Calculate the result to three decimal places, then multiply by $1,000. If the two day counts are equal, enter 1.000.
Can one application cover several foster youth employees?
Yes. Form RPD-41389 can include multiple qualified foster youth for the application’s tax year. Attach a separate RPD-41388 for each youth.
What happens if the approved credit is more than my income tax liability?
The excess is not refundable, but it may be carried forward for up to three years. The credit cannot be transferred to another taxpayer.
How can I check the status of my application?
Call (505) 827-0792 or email BusinessCredit.Mgr@state.nm.us.