Have you hired new workers since February 3, 2010? Are you considering hiring new employees? Then you may be interested in learning more about the Hiring Incentives to Restore Employment (HIRE) Act that President Obama signed on March 18.
This act was designed to encourage employers to hire and retain new workers. It provides a payroll tax exemption and a new hire retention credit. If you hired unemployed workers after February 3, 2010, you may be eligible for a 6.2 percent payroll tax incentive, which basically exempts you from the employer’s share of Social Security tax on wages paid to these workers after March 18. This will not affect the employee’s future Social Security benefits.
If a qualified employee is still on your payroll a year later and their wages did not significantly decrease in the second half of the year, your business may qualify to claim a new hire retention credit of up to $1,000 per worker on the business income tax return.
The IRS recently posted on its website the revised payroll tax form (Form 941) that is used to claim the payroll tax exemption. The instructions for Form 941 explain how to claim the credit. You will also need to get a signed statement from each eligible new employee that certifies under penalties of perjury that he or she was not employed for more than 40 hours during the 60 days before beginning employment with your company. The IRS has created new Form W-11 that you can use for this purpose. You will need to retain this form in your files. Further details can be found on the IRS website, http://www.irs.gov/.
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