Posts Tagged ‘Saving Business Taxes’

HIRE Act Retention Credit

Tuesday, September 27th, 2011

HIRE Act Retention CreditTax Credits

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.

Helpful Links

Business Credit for Retention of Certain Newly Hired Individuals in 2010

HIRE Act Flyer from IRS

Are You Missing Out? – PCS Blog Entry

Article Submitted By:

Bob Willbanks
VP of Sales & Marketing
Payroll Control Systems
763.746.1934 Direct
bwillbanks@pcspayroll.com

Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney, CPA or HR Professional.