James W. Boyan
Some good news for employers! The Hiring Incentives to Restore Employment (HIRE) Act provides tax incentives to employers that hire and retain previously unemployed workers. All private employers are eligible for these tax incentives.
What does the HIRE Act provide?
Social Security Tax Exemption
- Employers are eligible for a Social Security tax exemption if they hire a new employee between February 3, 2010, and January 1, 2011, who:
- Was previously unemployed; and
- Does not replace another employee of the employer.
- Employers that qualify for this tax exemption are not required to remit their share of the Social Security taxes for the new employees in 2010.
- To receive the exemption, a newly hired employee must sign an affidavit stating that he or she has not been employed for more than 40 hours during the preceding 60 days.
- The exemption has no cap or limit as to the total amount of tax benefits that can be claimed by an employer.
Income Tax Credit
- The HIRE Act also provides a tax credit for each new worker who remains employed for at least 52 consecutive weeks.
- The tax credit is the lesser of $1,000 or 6.2 percent of the wages earned by the employee during the 52-week qualifying period.
- The new employee must be employed for the full 52 weeks to qualify for this credit.
- In addition, the worker’s wages during the last 26 weeks must be equal to at least 80 percent of what he or she earned during the first 26 weeks.