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Hiring Incentives to Restore Employment Act (HIRE)

Guest post by: Kathy Clark

Article Overview: The HIRE Act, which became effective March 18, 2010, provides tax benefits for employers who hire unemployed or underemployed workers in 2010.

Hiring Incentives to Restore Employment Act (HIRE)

If you’re thinking about adding some new employees to your payroll, now might be the time to do it. According to the IRS, there will be new tax benefits for employers who hire unemployed or underemployed (part-time) workers. This is part of the Hiring Incentives to Restore Employment Act (HIRE) that was signed into law March 18, 2010.

The Act incents employers who hire unemployed or part-time workers, between February 3, 2010 and January 1, 2011 may be eligible for a 6.2 percent payroll tax incentive. This incentive exempts employers from the employer share of Social Security tax on wages for employees after the effective date.

This will not affect Social Security benefits for the employee as the employer will still need to withhold 6.2% of the employee’s share of Social Security taxes. Businesses who retain those employees for at least one year will also be able to claim an additional $1000 tax credit, per employee, on their 2011 tax returns.

“These tax breaks offer a much-needed boost to employers willing to expand their payrolls, and businesses and nonprofits should keep these benefits in mind as they plan for the year ahead,” said IRS Commissioner Doug Shulman.

Specifics of the Act:

· Tax benefits are especially helpful to employers who are adding new positions to their payrolls.

· Workers who fill existing open positions may also be eligible if the employee who vacated the position left for cause or voluntarily.

· Employers will be required to get a statement from the new employees certifying that they were unemployed during the 60 day period before beginning work or that they worked fewer than 40 hours during that 60 day period.

· 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 will be able to claim the payroll tax benefit on the federal employment tax return when they file.

· The new revised tax form will be available for 2^nd quarter 2010.Look for revised forms and eligibility details on the IRS website, in the next few weeks.

While there will definitely be some paperwork involved in this, it can potentially be an incentive for employers who are on the fence about adding positions in 2010.

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Article Tags: HIRE Act, Hiring Incentives to Restore Employment, incentives, Tax Benefits, Underemployed workers, Unemployed



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