Form 3554

If 2023 was your first year, the base year would be 2022 and full-time equivalents would be zero.

 

According to the State of California:

The base year is the year before the 1st qualified employee is hired. The base year is taxable year 2020 for an employer who hired its first qualified full-time employee during taxable year 2021.

Once the base year is established, it does not change from year to year.

 

An employer must determine their annual full-time equivalents for their base year, and for each taxable year for which they will claim a credit. The number of full-time equivalents is the number of full-time employees who work the entire year and a pro-rata fraction for full-time employees who did not work the entire year. For full-time employees who worked part of the year, the fraction is determined as follows:

• For a full-time employee paid hourly qualified wages, the total number of hours worked for the taxpayer by the employee (not to exceed 2,000 hours per employee) divided by 2000.
• For a salaried full-time employee, the total number of weeks worked for the qualified taxpayer by the employee divided by 52.

Part time employees are not included in the calculation of annual full- time equivalents."