The Hiring Incentives to Restore Employment (HIRE) Act was signed into law by President Obama. Unfortunately, this new law did not get a lot of press due to the Health Care Reform Passage, but is critical for employers who intend to hire.
Under this law, an employer who hires an employee after February 3, 2010 and before January 1, 2011 will receive a tax credit equal to the employer’s portion of the Social Security tax (FICA) for hiring an unemployed worker for a new position or to replace an employee who resigns or is discharged for cause. All employers, excluding government institutions, are eligibile for this tax credit.
Key facts of the HIRE Act:
Temporary payroll tax forgiveness of the employers 6.2% share of Social Security taxes (FICA) on wages paid to new hires. Employers will not have to match 6.2% of FICA on the employee’s wages for 2010. The exemption is effective March 19, 2010 to December 31, 2010
There is an additional general business income tax break of $1000 per employee hired who qualify under the HIRE Act if employment continues for 52 weeks
Revised form 941 (Employers quarterly federal tax return) will be released next month to document these tax credits
To qualify for the HIRE Act New Employees:
Must be hired after Feb. 3, 2010 and before January 1, 2011
Must certify and sign an affidavit stating they had not been employed for more than 40 hours during the 60 day period prior to the hire date with new employer. On April 7, 2010 the IRS released its final version of Form W-11 which is the HIRE Employee Affidavit. This form may be accessed at: http://www.irs.gov/
Must be employed for a new position or replacing an employee who voluntarily quit or was discharged for cause
Are not covered by the Work Opportunity Tax Credit program
Are not relatives of the employer
Can not earn more than $106,000 per year
