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By Dawna Chase, Certified Quickbooks® ProAdvisor, Paraprofessional
The Hiring Incentives to Restore Employment (HIRE) Act has been passed by Congress and President Obama has signed it into law. The HIRE Act provides for payroll tax forgiveness and an employer tax credit of up to $1,000 for qualified new hires. The specifics can be confusing, so we want to provide you with an overview.
With the constantly changing requirements, please keep in mind that Cordell, Neher & Company, PLLC offers payroll and payroll tax services so that our clients can spend more time concentrating on their business and its profitability.
Hiring Incentives: The HIRE Act provides qualified employers with temporary payroll tax forgiveness of the employer’s portion of Social Security payroll taxes.
Following are the highlights:
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Must hire an individual who has been unemployed for at least 60 days prior to you hiring them.
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Employee must begin part-time or full-time work after February 3, 2010, and before January 1, 2011.
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Payroll tax forgiveness will be on wages earned after March 18, 2010, and before December 31, 2010.
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To be considered “unemployed for the prior 60 days” the individual must not have been employed for more than 40 hours total in the last 60 days.
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The newly hired individual cannot displace a worker who is currently on your payroll unless the displaced worker voluntarily separated employment or was terminated for just cause.
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Seasonal agricultural employees do qualify.
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Individuals who are related to the employer do not qualify.
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The qualified individual will certify that they are qualified by completing IRS Form W-11 (HIRE Act Employee Affidavit). This form can be found online by going to the IRS’s website at www.irs.gov and searching for “W-11”.
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The payroll tax forgiveness applies only to the employer’s share of Social Security taxes. It does not apply to any other tax such as Medicare, state unemployment or industrial insurance.
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If the qualified employee is retained for 52 consecutive weeks, the employer may be eligible for a $1,000 federal tax credit under the Retained Workers Business Credit. This would be included on your business tax return for 2010.
For qualifying employees paid wages between March 18 and March 31, 2010, whatever amount is earned under the Act will be credited against the employer’s liability for the second quarter of 2010 on Form 941. Beginning April 1, 2010, an employer may take the payroll tax forgiveness into account in depositing payroll taxes under the regular payroll tax deposit rules.
QuickBooks provides for tracking this information through payroll set up. If you use QuickBooks as your bookkeeping software and would like assistance please contact our office, and we will be glad to help you.
If you have any questions on how to implement this, where to get the forms or how to make sure your payroll tax deposits are correct, please contact Dawna Chase, Certified Quickbooks® ProAdvisor and Payroll Services at 509-663-1661.
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