HIRE Tax Breaks Supporting the Recovery

By Lauriston Taylor, Controller Consultant, Next Stage Solutions, Inc. (NSS)

Summary:

The IRS has implemented two new tax breaks under the HIRE (Hiring Incentives to Restore Employment Act) program that will provide new incentives for employers to stimulate their staffing efforts.  Employers may qualify for the following two tax exemptions:

  1. Payroll tax: 6.2 percent payroll exemption of social security tax on wages, effective dates are 2 February 2010 through 31 December 2010.
  2. New Hire Retention credit: $1,000 per additional new worker that is retained for at least one year with no significant wage reductions during the later part of the year

Qualified Employees:

Those employees beginning employment after 3 February 2010 and before 1 January 2010 for a period of 60 days have been previously unemployed or worked 40 hours or less.  The following situations will qualify:

–  hiring a replacement for an existing position that has become vacant due to termination for cause or voluntary resignation

–  staffing of a new company and its initial staff

–  hiring for public colleges and universities

 

The staffing additions listed below will not qualify:

– State, local and federal positions

– House hold employers

– Independent contractors

– Employees who are related to the employer or who directly or indirectly own more than 50 percent of the business

 

The new hire should supply a signed Form W-11 and this should be kept on file for record keeping purposes.

Additional information:

For further details please refer to the IRS website

Form W-11 can be downloaded from this link

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