NEW TAX INCENTIVES AVAILABLE FOR EMPLOYERS HIRING CERTAIN UNEMPLOYED WORKERS
Congress passed the "Hiring Incentives to Restore Employment Act" (the "Act") on March 18, 2010. Under the Act a "qualified employer" that hires a "qualified individual" does not have to pay the employer share of Social Security payroll taxes (6.2% of wages) on wages paid between March 19, 2010 and December 31, 2010. In addition, if the new employee is retained for 52 consecutive weeks, the employer is eligible to receive a business tax credit of $1,000 or 6.2% of the employee’s wages, if less, on its 2011 income tax return.
A "qualified employer" is any employer other than a federal, state or local government. Employers in U.S. possessions that are subject to the social security tax are eligible.
A "qualified individual" is anyone who:
- Begins employment with a "qualified employer" between February 4, 2010 and December 31, 2010;
- Has not worked more than 40 hours during the 60-day period ending on the date employment begins;
- Is not hired to replace another employee unless that other employee voluntarily quit or was terminated for cause; and
- Is not related to the employer.
An employer can claim the Social Security tax exemption on Form 941 only if the qualified employee signs Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, which affirms that the employee satisfies the eligibility requirements.
View a copy of Form W-11.
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