Thursday, March 18, 2010

Two New Tax Benefits for Employers who Hire & Retain Unemployed Workers


Two new tax benefits are now 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 (HIRE) Act enacted into law today.

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

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.

The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.

In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period. The IRS is currently developing a form employees can use to make the required statement.

Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.

Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010. Revised forms and further details on these two new tax provisions will be posted on during the next few weeks.,,id=220326,00.html


Anonymous said...

This post is a detailed summary of the HIRE ACT. I am grateful for your posting it here because my niece is researching about online payroll services in relation to the items to be considered in payroll preparation. Her focus is on small business payroll services. This post will be one of her research resources on the topic.

Belle said...

HIRE Act is a beneficial thing for me. Especially like me who just rely on my small business. Payroll service of our small team has been changed three times because of employee's unwillingness to commit to work. Now with this, and directly to my employees, they said this rule will rekindle their appetite for the job. During our weekly meetings, we exchanged ideas about HIRE and we all got positive results, They even committed a new and fiery commitment to us. And on our side as employers, my husband and I saw a new life for our business. We actually hired seven new clerks yesterday. We are now planning of outsourcing payroll and some task because of the high demand for work. To face the reality, they have a big concern on their payroll.
's physical economy will surely regain its strength soon.

Stone Carlie said...

It is always exciting to hear that more companies will be hiring, from a CPA firms point of view, it means more business; that is never a bad thing.

porta said...

Hello dear.You have written a great post. Going to share with my followers on twitter. Thanks for sharing.

Funeral okmulgee

justin albert said...

Thanks for your great post.I like this very much, please write more about these,wait for your update

PIC Grant Singapore