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Take Advantage of the HIRE Act

by Gerri on Sunday, June 6th, 2010 | No Comments

With everything else going on, many have not heard of the HIRE Act.  If you are a business owner or someone looking for work you should know about this new government incentive .

The main point of the HIRE Act is for employees hired after February 3rd through the end of the year an employer does not have to pay his portion of Social Security on qualified employees.

A qualified employee is someone who has worked less than 40 hours in the previous 60 days.  The employee is required to sign an affadavit that he is an eligible employee.  This affadavit is currently being developed by IRS and should be available soon.

The qualified employee cannot be replacing another employee unless that previous employee was fired for cause or left on his own.

Eligible wages are those that were paid after March 18, 2010 and through the end of the calendar year.

A new 941 has been developed which will allow for the reduction from first quarter as well as the second quarter reduction when filing the June 30th report.  An employee may elect to reduce down payments made during the quarter for employees that he will not have to pay the 6.2% tax on.

The Medicare tax is not excluded, only the Social Security portion for the employer.  Both Social Security and Medicare taxes must be withheld from the employee.  The employee will continue to get the benefit as if the taxes had been paid.

The second benefit under the HIRE Act is that if the employer keeps the employee for at least one year, when filing their 2011 tax return they will be eligible for a $1000 general business credit.

For those businesses using a payroll service, they are well aware of this change.  If you do your own payroll, make sure that you learn all the ins and outs before filing your June 30th 941 payroll form.

Why should you be concerned as a potential employee?  Watch that you do not put yourself in a position of the employer not being able to claim that exemption by being just a few hours over the 40 limit.  If you qualify under the HIRE Act as a qualified employee, then make sure those interviewing you are aware that you do.

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