If you are an employer who recently hired new workers, you may be eligible to claim a 6.2% tax credit on all wages paid to employees you have hired since February 3, 2010 (or will hire prior to December 31, 2010), up to a limit of $106,800.
The Hiring Incentives to Restore Employment (HIRE) Act that was enacted in June gives qualified employers that hefty 6.2% tax credit on all wages paid to employees hired between February 3, 2010 and December 31, 2010. The credit applies to all wages paid to these new hires between March 19-December 31, 2010.
Employers are eligible for a payroll tax credit when the employer hires certain new employees after February 3, 2010, and before January 1, 2011. In order to take the payroll tax credit, the employee must have either been unemployed for at least 60 days prior to hire or worked fewer than 40 hours for another employer during the previous 60 days. Employers will not be required to pay the employer portion of the qualifying new hire’s Social Security tax, which is 6.2%.
Employers also receive a general business income tax break if the employer continues to employ the new hire for at least 52 weeks. The tax break is the lesser of $1,000 or 6.2% of wages paid to the new employee during the 52-week period.
New employees who are related to the employer are not eligible. Also ineligible are employees who earn more than $106,000 per year and employees who replace a current employee, unless the first employee resigned or was terminated for cause.
You need to document the workers’ hours and also provide a signed affidavit that they were not employees prior to the hiring window for eligibility. You can get more information on the HIRE Act at http://www.irs.gov. Or check with your company’s accountant for all the details on necessary paperwork and how to claim the tax credit.
Not a bad way boost the bottom line while building your workforce back up.
Michael Serabian is president of PQNDT, Inc., the NDT industry’s leading personnel recruitment and placement agency (www.pqndt.com).