Job Incentives Bill Passed
The Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847), signed by President Barack Obama on March 18, 2010, is a $17.5B jobs bill intended to spur hiring and help small businesses.
There are two key components to the job incentive portion of the bill. First, businesses who hire a worker out of work for more than two (2) months, at a wage of up to $106,800, are “forgiven” the 6.2% Social Security (“SS”) payroll tax liability. The maximum value would be $6,621 per employee.
In order to be eligible, businesses must hire a “qualified” employee, who:
- Starts work between February 3, 2010 and January 1, 2011, although wages paid after March 18 will be eligible;
- Must not have worked for more than forty (40) hours over the preceding sixty (60) days before the date of hire;
- Must not replace a current employee unless that employee resigned or was terminated for cause;
- Must not be related to the owner of the business or have more than a 50% ownership interest; and
- May have been previously laid off employees.
- May be full- or part-time employees.
The payroll tax forgiveness does not apply to wages paid in the first quarter of 2010, but wages paid after the bill was signed (March 19) would be credited against your OASDI liability for the second quarter.
As an additional incentive, an employer who keeps an employee for 52 continuous weeks would be entitled to a tax credit of up to $1,000. This credit would be filed by you on your company’s corporate tax return.
More information about the HIRE Act, including the IRS Form W-11, can be found here.