Thurman, Shinn & Company
HIRE Act Summary
6.2% Employer Social Security Tax Exemption
Hires after 2/3/10 ? before 1/1/2011.
Applies to wages paid after 3/18/10.
Exemption equal to 6.2% of wages paid - limited to $106,800 of wages or $6,622 per qualifying worker.
No minimum wage or hours worked requirement
New hires who worked less than 40 hrs during the 60-day period prior to employment. (60 day period is continuous). Recent graduates (who meet requirements) qualify.
Cannot be hired to replace another employee unless the other employee voluntarily terminated or separated from employment for cause.
Applies to: Taxable businesses and tax-exempt organizations, new businesses, public colleges and universities but, not governmental entities.
If rehire former employee on COBRA assistance, they qualify. (if meet rules).
Cannot claim both Social Security Tax Exemption and WOTC. If claim WOTC cannot claim any exemption.
Restaurants claiming 45B Credit ? may be able to claim exemption also.
Employee must not be related to the employer ? i.e. Child or descendent of child, sibling, stepsibling, parent or an ancestor of parent, your stepparent, niece, nephew, aunt, uncle, in-law or anyone related to someone who owned 50% or more of stock or profits interest. See W-11 for details.
Household employers are not eligible for these benefits.
Any new hires must certify ?by signed affidavit?, under penalties of perjury, that he/she has not been employed for more than 40 hours during the 60 day period ending on the date such individual begins such employment.
May use form W-11 (not required).
Must have signed affidavit by the time the employer files the employment tax return claiming the exemption.
Neither the 6.2% exemption nor credit is permitted if the new employee replaces another employee unless the replaced employee was separated from service voluntarily or for cause.
Revised 941 for 2nd Quarter 2010.
Exempt wages paid for the 1st quarter are reported on the 2nd quarter 941 lines 12a to 12d.
Schedule B is not impacted by the adjustment for 1st quarter exempt wages.
Watch Sch B ? must adjust liability on Sch B for the exempt wage paid in the 2nd quarter. Amount on Sch B must agree to line 10 of 941.
?Retained Worker? Tax Credit (in addition to exemption of 6.2%)
Employers will receive an income tax credit ? if new hire retained for at least 52 consecutive weeks.
Credit is lesser of: $1,000 for each qualifying worker hired after 2/3/10 or 6.2% of wages paid to the qualifying worker over 52 week period. Wages paid for the last 26 weeks must be at least 80% of wages paid for first 26 weeks.
S179 Expensing Limit Increased
$250,000 limit for small businesses for 2010.
For more detail see the HIRE Act 2010 link.
If you have any questions, feel free to call our office: 573-760-9400.