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To Make You aware, the 2010 Federal HIRE Act was signed into law by President Obama on March 18, 2010. The law provides for Employer Tax savings for qualified new hires.
This is a simple recap of the basic rules of the 2010 Hiring Incentives to Restore Employment Act, commonly known as the "HIRE Act". This is not meant to be all inclusive and does not constitute legal advice. Please refer to the IRS website www.IRS.gov or to your legal counsel for further information.
How do I get Payroll Tax Forgiveness in the amount of 6.2% ?
- New Hire must be Additional Labor or Replacement for someone who left voluntarily.
- New Hires can NOT displace a current employee
- Re-Hires of former employees that were laid off may qualify also.
- Qualified New Hire cannot have worked more than 40 hours in the last 60 days.
- Qualified New Hire must complete Form W-11 to verify their unemployed status.
- New Hire may work any number of hours - Full Time or Part Time
- Qualified New Hires can be hired from February 3, 2010 until January 1, 2011.
What is the "Tax Forgiveness"? What does that Mean?
- Essentially, if a Newly Hired Employee Qualifies under this plan, then as their Employer, you do not have to pay the Matching OASDI or Social Security Tax on this employee for wages paid March 18 2010 through December 31, 2010.
- That is a savings of 6.2% of Taxable Wages with a limit of $6621.00 per employee
- The sooner you hire, the more savings you will earn.
- NOTE: Since payroll taxes are deductible as an ordinary business expense, employers earning Tax Incentives will have a corresponding smaller business expense
When will Employers get their Tax Savings?
- Tax Savings by Qualified New Hires before April 1st, will be credited against Tax Liabilities on the employers 2nd Quarter 2010 payroll tax returns.
- After April 1, 2010 the savings can be taken directly as a deduction of deposits of Payroll Taxes.
Are there More Savings Available? Yes! There could be !!
- If a Qualified New Hire is retained and earns wages for 52 consecutive weeks, that employer may gain the lesser of: $1000 or an additional 6.2% of wages paid.
- An employee who earns more than $16129 in this 52 week period would qualify his employer for an additional $1000 credit.
- Those paying LESS than $16129 during 52 Consecutive weeks of work would qualify for an additional 6.2% tax credit.
If you have employees that fit the criteria, fax a completed Form W-11, for each qualified new hire, to our office and we will apply the Credit for the Employer portion of the Social Security Tax on your Quarterly 941 Tax Returns.
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