Originally published April 15, 2010
Earlier this month, two new tax benefits became available to
employers hiring workers who were previously unemployed or only
working part time. These provisions are part of the Hiring
Incentives to Restore Employment Act (the "HIRE Act")
enacted into law on March 18.
Employers who hire unemployed workers after February 3, 2010 but
before January 1, 2011 can qualify for a 6.2-percent payroll tax
incentive - the equivalent of an exemption from the employer's
share of Social Security taxes on wages paid to these workers in
2010. In addition, for each worker retained for at least a
year, businesses may claim an additional general business tax
credit, up to $1,000 per worker, when they file their 2011 income
tax returns.
To qualify for the credits, the employer must receive a statement
from each eligible new hire certifying that he or she was
unemployed during the 60 days before beginning work, or
alternatively, worked less than a total of 40 hours for someone
else during the 60-day period. The IRS has issued Form W-11
for this purpose. It is found at http://www.irs.gov/pub/irs-pdf/fw11.pdf.
According to the IRS' press release, "Though employers
need this certification to claim both the payroll tax exemption and
the new hire retention credit, they do not file these statements
with the IRS. Instead, they must retain them along with other
payroll and income tax records."
Eligible workers for the tax credits described above include all
hires for new non-domestic worker positions. New hires
filling existing positions also qualify but only if the workers
they are replacing left the employer voluntarily or were terminated
for cause. Family members and other relatives of the employer do
not qualify for either tax incentive.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
