The Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847) has been signed into law and will provide significant tax incentives to companies who hire certain workers who have been unemployed.
Signed by President Obama on March 18, The HIRE Act provides relief from the 6.2% employer portion of Social Security FICA Tax for hiring workers who meet eligibility requirements, as well as a tax credit for employers who retain those employees for at least one year.
Designed to create new jobs for the currently unemployed, this Act will offer companies great savings while helping to heal the economy.
Hire Employees and Earn Payroll Tax Forgiveness:
Companies who hire Qualified Employees will have the 6.2% portion of that employee(s) FICA tax forgiven up to the $106,800 wage maximum for the remainder of 2010. This allows savings of up to $6,622 per qualified employee.
To qualify, the new employee(s) must meet the following requirements:
- The employee(s) must have started work between February 3, 2010 and Jan 1, 2011.
- The new employee(s) must have been unemployed for at least 60 days (with no more than 40 hours of work during that time) prior to his or her start date.
- The new employee(s) must not be replacing an existing current employee(s), unless the position was vacated voluntarily or for cause.
- The new employee(s) may not be related to the employer or own more than 50% of the business.
- This Act applies to both part-time and full-time employees.
- This can apply to your previously laid off employees.
Keep Employees and Earn a Retention Tax Credit:
Companies who keep these new employee(s) on the payroll for at least 52 consecutive weeks can receive an additional tax credit of the lesser of $1,000 or 6.2% of the wages received during that year-long period.
To qualify, the new employee(s) must meet the following requirements:
- The employee(s) must meet all of the same eligibility requirements set forth above for the payroll tax forgiveness.
- You must employ the new worker for the full 52 consecutive weeks; there is no prorated amount for a shorter time period.
- Workers eligible for foreign earned income exclusion are not eligible.
- Wages cannot significantly decrease over the course of the 52 weeks; wages for the second half of the year must be at least 80% of the wages the employee(s) earned during the first half of the year.
What This Means to You:
This tax credit does not have a limit on new hires, so the more unemployed workers you hire, the more savings your company will receive.
Since the Social Security FICA tax relief has time constraints, hiring employees sooner rather than later will allow companies to save more, as well. Nextep’s Human Resources Department is available to help with your recruiting needs.
Similar to the COBRA Subsidy, Nextep is prepared to administer these tax savings for you. As the Department of Labor releases their official paperwork, we will assist you with specific instructions and forms needed to take advantage of this savings.
