A tax credit of up to $1,000 per eligible employee is available for 2011 to employers who retain qualified new employees.
A retained worker is one who:
- Is hired by the employer after February 3, 2010 and prior to January 1, 2011;
- Continues to be employed by the same employer for a period of at least 52 consecutive weeks and
- Whose wages for the last 26 weeks of the 52 week period are at least 80% of the wages for the first 26 weeks in the 52 week period.
A qualified new employee is anyone who:
- Begins work after February 3, 2010 and before January 1, 2011;
- Certifies by signed affidavit on IRS Form W-11 that they had not been employed for more than 40 hours during the 60 day period ending on the date employment begins;
- Is not hired to replace a terminated employee, unless the former employee voluntarily separated from employment or was terminated for cause and
- Is not related to the employer.
The credit amount is equal to the lesser of:
- $1,000 or
- 6.2% of wages paid by the employer to the qualified retained worker during the 52 week period following hire.
The HIRE Act Retention Credit can be claimed for a qualified employee even if the employer has also claimed the Work Opportunity Tax Credit for the same employee.
Did your business get the payroll tax credits you were entitled to under the 2010 HIRE Act?
- The employer's 6.2% of the social security tax did not apply to wages paid to qualified new hires for employment after March 18, 2010 and before January 1, 2011.
- The employer can secure a late Form W-11 affidavit from the new hire and file an amended return.
- Franchisees should review their employee files to see if they have any new hires that qualify but the payroll tax reduction was not claimed.
For additional questions, please contact John Fossum at 320-650-0234 or firstname.lastname@example.org.
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