| The recently enacted HIRE Act of 2010 is intended to | | | | Who is an eligible employer for the HIRE Act? |
| offer tax incentives to employers who hire eligible | | | | Businesses, agricultural employers, tax-exempt |
| employees by offering payroll tax credits. Overall, the | | | | organizations, temp agencies, employees in U.S |
| HIRE Act is straight- forward and determining who is | | | | territories and public colleges and universities all qualify |
| an eligible employee is not overly difficult. | | | | to claim the payroll tax benefit for eligible newly hired |
| Under the HIRE Act, employers can receive a payroll | | | | employees. The HIRE Act also applies to brand new |
| exemption of their 6.2% share of social security tax on | | | | businesses. A business that lays off workers due to |
| all wages paid to qualified employees, exempting the | | | | lack of work and hires new staff when business |
| employer from their share of Social Security taxes on | | | | improves may qualify. The hire act even applies to |
| 2010 wages paid to these workers after March 18, | | | | employees who are laid off and rehired for the same |
| 2010. Employers are still liable for Medicare tax on all | | | | position, and employees hired from a temp agency if |
| wages. In addition to the 6.2% savings, businesses who | | | | the temp agency has not claimed said employees |
| retain a qualified employee for a 52 consecutive week | | | | wages. |
| period can qualify for a tax credit of up to $1,000 | | | | For an employee to be eligible he/she does not need |
| provided the employee's pay does not decrease | | | | work a minimum amount of hours or for a set period. |
| significantly in the second half of the year. The | | | | Of course, to receive the general tax credit the |
| employer may claim the new hire retention credit on | | | | employee must be employed for 1 year. Employers |
| their 2011 income tax return. | | | | may claim the Cobra Premium Assistance Credit and |
| What employees are eligible for the HIRE Act? | | | | the Payroll Tax Exemption for new hires on the same |
| The basic instructions, as explained on IRS Form W-11 | | | | employment tax return. |
| are as follows. Employee must begin employment | | | | As you can see, the requirements for the HIRE Act |
| after February 3, 2010 and before January 1, 2011. An | | | | are not overly stringent or difficult to meet. The W-11 |
| eligible employee has not been employed for more | | | | Affidavit is currently available on the IRS official |
| than 40 hours during the 60-day period ending on the | | | | website as well as additional information regarding |
| date the employee begins work with employer. The | | | | more specific tax questions. Enrolled agents, CPA's |
| employee must sign a W-11, or similar affidavit to be | | | | and other registered tax preparers should be aware |
| eligible. An employee is not eligible if he/she replaces a | | | | of this opportunity to help clients save money under |
| fired employee, but is eligible if filling a voluntarily | | | | the Hire Act. These new rules cannot show up on the |
| vacated position, or as a result to downsizing. | | | | enrolled agent exam until the 2011 testing period, so if |
| Employees who are also not eligible for the HIRE Act | | | | you are a prospective enrolled agentcurrently studying |
| are any persons related to the employer, or a relative | | | | for the 2010 EA exam, you will not need to know |
| or dependent of anyone who owns more than 50% of | | | | these rules. The 2011-2012 enrolled agent course will |
| outstanding stock or capital of a business. The HIRE | | | | cover this new law. |
| Act does not apply to household employees. | | | | |