On March 18, 2010, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act. This $17 billion jobs bill provides employers with financial incentives for hiring unemployed workers and retaining them for at least one year. There are two provisions that will impact hiring employers.
- Social Security Tax Exemption – For eligible newly hired employees, the employer would be exempt from paying its share of 2010 social security taxes (6.2% of wages). This exemption applies to all wages paid after March 18, 2010, but applies to all eligible new employees hired after February 3, 2010. To be eligible, the new hire must have been unemployed for at least 60 days prior to their date of hire (or worked fewer than 40 hours during that 60 day period).
- Business Income Tax Credit – The employer is also eligible for an income tax credit equal to the lesser of 6.2% of wages paid to the qualified worker over their first 52 weeks of employment, or $1,000. To qualify, the employee must be retained for at least 52 weeks and wages during the last 26 weeks must be at least 80% of their wages during the first 26 weeks.
To qualify for these tax breaks, the employer must obtain a written statement from the employee certifying that they meet the aforementioned requirements of being unemployed for the prior 60 days. The IRS will develop a form to facilitate this documentation, but in the interim, a sample certification letter is attached for you to use.
The HIRE Act also provides that for the balance of the month of March 2010, employers should continue to remit the social security taxes on qualified employees and that these payments may then be applied to their second quarter tax return.
If you have any questions, please contact John Morlock at Total Team Solutions to discuss.
This e-mail address is being protected from spambots. You need JavaScript enabled to view it or 800-836-9678, x-17
