The Hiring Incentives to Restore Employment (HIRE) Act
On March 18, 2010 the president signed into law new job-creation legislation known as The Hiring Incentives to Restore Employment (HIRE) Act. The law is a continuation of efforts by the federal government to get Americans back to work.
Employers who hire workers after February 3, 2010 and before January 1, 2011 who were previously unemployed or only working part time may realize two new tax benefits:
- Social Security Tax Exemption. The social security tax of 6.2% of the first $106,800 in wages paid by the employer will be exempt. Maximum amount of incentive: $6.621.60 per new hire
- For each worker retained for at least a year, the business may claim an additional general business tax credit of up to $1,000 per worker on their 2011 income tax return
These two tax benefits are particularly beneficial for employers who are adding new positions to their payrolls. Newly hired employees filling existing positions will qualify for the tax breaks only if they are replacing workers who left voluntarily or for cause. Employer's family members and other relatives do not qualify.
The new law requires that the employer obtain a statement from each eligible new hire certifying that he or she was unemployed or worked fewer than 40 hours per week during the 60 days prior to beginning work. The IRS has made available Form W-11 that can be used to make the required statement.
Employers will claim the payroll tax benefit on the federal employment tax return they file with the IRS, usually quarterly. The revised employment tax forms will be available for the second quarter of 2010.