The “Hire Act”

President Obama signed the “Hire Act” yesterday in a Rose Garden ceremony. This bill will impact any employer hiring individuals that have been unemployed for at least 60 days. The legislation allows employers an immediate credit of the employer portion of the Social Security tax remitted during regular tax deposits. This credit will first appear on a quarterly form 941 during the second quarter 2010.

From our Payroll Provider ::

“We are currently working closely with the Internal Revenue Service so that we can assist you in taking the credit as soon as possible. Our Development Team will assist with a technical solution to enter and track the credit as soon as we receive guidance from the IRS. The IRS has stated that the 941 will not be revised for the 1st Quarter of 2010. Any Social Security tax paid for eligible workers during Quarter 1 will be credited during the 2nd Quarter of 2010.”

Here is an explanation of what this mean ::

Employer Social Security Tax Credit

The 6.2% Employer Social Security Tax exemption applies to 2010 wages paid after March 17, 2010 and before January 1, 2011, to individuals hired after February 3, 2010, who were previously unemployed for at least 60 days and who do not exceed the $106,800 Social Security wage base. There is no limit to the number of qualified workers each employer can hire, nor to the total amount of the tax credit. The maximum credit per employee is $6,621.60.

Tax Credit for 52 Consecutive Weeks

Employers will receive an income tax credit, which is either $1,000 for each qualifying worker hired after February 3, 2010, and employed for at least 52 consecutive weeks, or 6.2% of wages paid to the qualifying worker over the 52-week period, whichever is less. Wages paid during the last 26 weeks must be at least 80 percent of wages paid for the first 26 weeks.

Eligibility Requirements

Covered Employees must sign an affidavit, under penalties of perjury, that they were not employed for more than 40 hours during the 60 day period immediately preceding their hire date. The 6.2% Employer Social Security Credit and Consecutive Employment Credit are only permitted if the employee is hired in a newly created position, or to replace an employee who separated from employment voluntarily or for cause.

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