After all of the dust settled on the March 18, 2010 Hiring Incentives to Restore Employment (HIRE) Act, many businesses are forgetting that the Act provided a second opportunity for tax savings based on retention of HIRE Act eligible employees.
The HIRE retention credit is a general business credit to encourage retention of new hires and will be claimed on the employer’s income tax return. The amount of the credit is the lesser of $1000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. The qualified employee’s wages for such employment during the last 26 weeks must equal at least 80% of wages for the first 26 weeks. This credit cannot be carried back to years beginning before March 18, 2010, but may be carried forward. The credit will be claimed on the employer’s income tax return.
*PCS does not apply this credit as it is a credit on your business tax return.
HIRE Act: Questions and Answers for Employers
From IRS Website www.IRS.gov
Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).
The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.
In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.
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VP of Sales & Marketing
Payroll Control Systems
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