The New Hire Act Offers Tax Credits for Employers
As part of the effort by the government to stimulate job growth, the Hiring Incentives to Restore Employment (HIRE) Act, offers two new tax benefits for employers who hire unemployed workers who meet certain qualifying standards.
The first, the payroll tax exemption, “provides employers with an exemption from the employer’s 6.2% share of social security tax on wages to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.”
The second, “the new hire retention credit” gives employers a tax credit of 6.2% of wages paid to qualified employees retained for at least and more than 52 consecutive weeks, up to a maximum of a $1000 tax credit.
Qualified employees, according to IRS.gov are “individuals who begin employment with a qualified employer after February 3, 2010, and before January 1, 2011, who have been unemployed for 40 hours or less during the 60-day period ending on the date such employment begins. The 60-day employment period must be continuous and can span from 2009 into 2010.” Family members who are hired by a qualified employer are not eligible for this program, but recent graduates who have been in school for some or all of the 60 days preceding the start of employment can qualify if the employer is qualified. Rehired employees who also meet requirements are also considered “qualified.” There is no age requirement for employees.
Each qualified employee must sign a W-11, the Hiring Incentives to Restore Employment Act Employee Affidavit. These forms are available. Without the W-11 or a similar statement (under penalties of perjury), an employee will not be able to the claim the payroll tax exemption or new hire retention credit of the HIRE Act. As an employer, keep the W-11 or similar statement with payroll and income records.
For questions concerning the HIRE act, visit the IRS web site.
09/17/2010
