Recent legislation referred to as the HIRE (Hiring Incentives to Restore Employment) Act encourages employers to hire unemployed workers. This Act includes two new tax benefits which offer a much needed boost to companies who need to expand their workforce.
- A potential 6.2 % payroll tax incentive.
- A retention tax credit of up to $1,000.
You could qualify for a 6.2% payroll tax incentive
Employers who hire unemployed workers between Feb. 3, 2010 and Jan. 1, 2011 could be exempt from withholding the employer's share of Social Security tax on wages paid to these workers after March 18, 2010.
Employers will continue to withhold the employee's 6.2 % share of Social Security taxes, as well as income taxes. The reduced tax withholding has no effect on the employee's future Social Security benefits, and the employer and employee's share of Medicare taxes still apply to these wages.
How about a $1,000 retention tax credit?
In addition to the 6.2% payroll tax savings, for each unemployed worker that you retain for at least 52 consecutive weeks, employers may be eligible for a general business tax credit of up to $1,000. Sequent clients can claim this tax credit on their year-end 2011federal tax return.
What do you need to do to receive the benefit?
If you are a Sequent Professional Employer Services client, just follow these steps:
- Ask the new employee to complete an IRS Form W-11 Employee Affidavit, which certifies that they have not been employed for more than a total of 40 hours during the 60 days leading up to beginning employment with your company.
- Send the Employment Application and the completed Form W-11 to Sequent when you hire the employee. Retain a copy of the completed Form W-11 for your files.
- Call your Sequent Personal Service Team for details, 877-447-4111.
For more information, click here to link to the IRS.
About the Author, Susan Boothe, Senior Professional in Human Resources at Sequent.
Susan has over 18 years experience in Human Resources, partnering with business leaders to build teams, investigate complex situations and respond to allegations of unfair treatment. In her role at Sequent, she uncovers business needs to establish HR processes and to enhance the knowledge base for the Sequent HR Service Center.