RPD-41389: RPD-41389 Application For Foster Youth Employment Tax Credit (2024)
New Mexico · New Mexico TRD · Used for tax years 2024
Form RPD-41389 is New Mexico’s application for the Foster Youth Employment Tax Credit. It reports the employer’s tax year, the number of attached employee certifications, and the total credit requested, with a section for allocating the credit to owners, members, or partners.
Who files this form
Eligible employers use Form RPD-41389 to apply for the foster youth employment tax credit. This is an application for a credit, not a filing requirement for every employer.
The credit is available to taxpayers who employ a qualified foster youth in New Mexico for at least 20 hours per week. It may reduce personal or corporate income tax by up to $1,000 for wages paid to each qualified foster youth. The credit is reduced proportionally if the qualified employment period is less than the employer’s full tax year.
The form defines a qualified foster youth as someone currently in qualifying legal custody, or who was in that custody within the seven years before the tax year for which the credit is claimed and was age 14 or older. Qualifying custody includes 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 (BIA), Division of Human Services.
The youth must not have been employed by the taxpayer before the tax year for which the credit is claimed. Only one employer may receive the credit for a particular youth during a tax year, and the credit cannot cover more than one calendar year from the date of hire.
What you'll need
Prepare these forms and attachments:
- Completed Form RPD-41389, Application for Foster Youth Employment Tax Credit.
- Form RPD-41388, Certification of Eligibility for the Foster Youth Employment Tax Credit, for each qualified youth included in the application.
- A copy of the foster youth employment certificate from CYFD, a New Mexico Indian Nation, Tribe or Pueblo, or the BIA Division of Human Services. It must show the date the youth was placed in legal custody.
You will also need the employer’s contact information, physical address, mailing address if different, New Mexico CRS identification number, and the first and last dates of the employer’s tax year.
If allocating the credit to owners, members or partners, Part II asks for each person’s name, ownership percentage, SSN or FEIN, and allocated amount.
Forms must be signed and dated. The Department may request additional documents to verify eligibility.
How to file
- Complete the employer information on Form RPD-41389.
- On line 1, enter the first and last days of the employer’s tax year in which the eligible employment took place.
- On line 2, enter the number of attached Forms RPD-41388.
- On line 3, enter the total credit requested by adding line 10 from each attached Form RPD-41388.
- Complete Part II if allocating the credit to owners, members or partners of a business taxed as a partnership.
- Sign and date the form, and include the required certifications and attachments.
Email the application package to BusinessCredit.Mgr@state.nm.us, or mail it to:
Taxation and Revenue Department
Attention: RPD Business Credit Unit
P.O. Box 5418
Santa Fe, NM 87502-5418
Submit the application for approval before claiming the credit. Once approved, attach Form RPD-41390, Foster Youth Employment Tax Credit Claim Form, to the personal or corporate income tax return for the tax year in which you employ the qualified foster youth.
Common mistakes
- Submitting an incomplete application or missing documents. The form warns that this may result in denial of the credit.
- Forgetting signatures or dates. The checklist specifically reminds applicants that forms must be signed and dated.
- Claiming the credit before approval. Submit the application and certifications to the Department for approval first.
- Applying for a youth already approved for another employer in the same tax year. Later applications for that youth and tax year will be denied. Applications are processed in the order received.
- Claiming more than the allowed employment period. An employer may not receive the credit for a youth for more than one calendar year from the date of hire. Multiple employers may not receive credit for more than one year combined for the same youth.
- Allocating more than the approved credit. The total claimed by all owners, members or partners cannot exceed the approved amount.
Questions people ask
Can one application cover more than one foster youth?
Yes. An application may include multiple qualified foster youth for the application’s tax year. Attach a separate Form RPD-41388 for each youth included in the total credit.
Will I receive a refund if the credit exceeds my income tax liability?
No. The excess is not refundable, but it may be carried forward for up to three years.
Can a partnership allocate the credit to its owners?
Yes. A business taxed as a partnership for federal income tax purposes may allocate the right to claim the credit in proportion to ownership interests. Complete Part II. The total allocated credit cannot exceed the approved amount.
How can I check my application’s status?
Call (505) 827-0792 or email BusinessCredit.Mgr@state.nm.us.