The HIRE Act and How It May Impact Your Business
The Hiring Incentives to Restore Employment Act (HIRE), also known as the "jobs bill," is a plan to create jobs by providing a temporary tax break to companies that hire the unemployed. The bill also extends federal highway programs through the end of the year.
Current Status
On March 18, 2010, the President signed the HIRE Act into law. The IRS is now outlining how to handle the Act's provisions. We will continue to monitor the situation, and will update you as final details emerge.The cornerstone of the HIRE Act is a federal program that will provide employers with incentives to hire and retain employees. HIRE will exempt an employer from paying the employer portion of Social Security taxes for the remainder of the year on new hires who are currently unemployed. If those workers stay on the payroll for at least a year, the employer would also get a $1,000 business tax credit per employee.
Social Security Tax Forgiveness
The 6.2% employer portion of the Social Security tax would be exempt for any qualified individual hired after February 3, 2010 and before January 1, 2011, for wages paid in 2010 to the $106,800 Social Security wage base. Qualified employers may begin claiming this tax credit on the second quarter 2010 Form 941.A qualified individual meets the following requirements:
- Begins employment with a qualified employer after February 3, 2010, but before January 1, 2011.
- Has not been employed for more than 40 hours during the previous 60 days. The individual must sign an affidavit attesting to the employer that he was not employed in the previous 60 days, or was employed for no more than 40 hours total.
- Is not hired to replace another employee unless the previous employee was separated from employment voluntarily or for cause.
Note: The Social Security tax exemption can not be taken in conjunction with the Work Opportunity Tax Credit (WOTC). In other words, if the employer chooses to take the WOTC on a qualified worker, they cannot also take the Social Security tax exemption.
Business Credit for Retention
A business tax credit can be claimed by the employer for each qualified individual hired after February 3, 2010 who stays with the employer for 52 consecutive weeks. This business credit will be the lesser of $1,000 or 6.2 percent of the wages paid by the employer to the retained worker during the 52 consecutive week retention period.For the employer to claim this additional credit, wages paid during the previous 26 weeks must equal at least 80% of wages during the first 26 weeks of employment.
I hope this info is useful. I'll have more QuickBooks Tips soon.
I'm Jayne Miller, The QuickBooks Gal.
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Labels: HIRE Act, Soc Sec Forgiveness
posted by BlogGal @ 12:43 PM
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