HIRE Act provides tax incentives for hiring new employees

The federal HIRE Act*, which was signed into law on March 18, 2010, is aimed at accelerating the hiring of unemployed workers. If you hire qualifying workers after February 3, 2010, you do not have to pay the employer’s 6.2% share of the Social Security payroll tax for those workers for the remainder of 2010. An additional incentive is that you are also eligible for an additional general business tax credit/retention credit for any qualifying workers hired: you can receive a credit up to $1,000 per worker when you file your 2011 taxes.

To gain the most benefit from this new law, you should act quickly, because the tax advantages diminish over time, disappearing completely at the end of 2010.

Here are the requirements:

• The worker hired cannot have been employed for more than 40 hours during the 60 days prior to being hired.
• The workers must begin employment after February 3, 2010 and before January 1, 2011.
• You must keep the hired workers on your payroll for a continuous 52 weeks to qualify for the general business tax credit. 
• The new employee must not be a replacement for another employee unless the other employee separated from employment voluntarily or was terminated for cause, not lack of work.
• An employee cannot be related to the employer
• Household employees do not qualify

A new employee must certify “by signed affidavit,” under penalties of perjury, that he or she meets these eligibility requirements. That means you, as the employer, do not bear the burden of proof of eligibility.

Click here to download IRS form W-11, employee affidavit.
Click here to download a brief information form that gives us the information required for audit.

As part of our continued commitment to you, we have already adapted our payroll system to automatically capture this incentive by eliminating the employer-paid component of the applicable Employer Social Security Tax for eligible employees.

Employee Professionals will charge a flat fee of $50 per eligible employee to fully administer this new law.  

NOTE: The HIRE Act also permits small businesses to write off equipment investments up to $250,000 this year, instead of depreciating that amount over several years.

* Hiring Incentives to Restore Employment Act of 2010