HIRE Act of 2010
Hiring Incentives to Restore Employment
Last month President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act of 2010. The HIRE Act is intended to accelerate the hiring of unemployed workers. The HIRE Act includes a payroll tax exemption, and increased tax credits for employers that meet certain eligibility requirements.
Social Security Tax Exemption
Under the HIRE Act any employer (except government employers) of a qualified employee will not have to pay the employer match for the 6.2% Social Security portion of that employee's wages in 2010.
Who is a qualifying employee?
1. Was hired after Feb. 3, 2010 and before Jan. 1, 2011
2. Worked less than 40 hours during the 60-day period prior to employment
3. Is not employed to replace another employee
4. Is not related to the employer (under the rules for the Work Opportunity Tax Credit (WOTC)).
5. 2010 earned wages after March 18, 2010 and before January 1, 2011 do not exceed $106,800
Retained Worker Tax Credit
Under the HIRE Act employers will receive an income tax credit of 6.2% of wages with a maximum of $1,000 per employee.
Who is a retained employee?
1. Hired by the taxpayer/employer on any date during the tax year
2. Employed for at least 52 consecutive weeks
3. Wages during the last 26 weeks of that same 52 week period equaling at least 80% of his/her wages during the first 26 weeks of the period
The first year the credit will be available is 2011 since the 52 week requirement cannot be met before Feb. 2, 2011.
