If you’re hiring, a new law could save your company more than $7,000 per employee. And the sooner you hire, the more you can benefit.
Signed into law March 18, 2010, the Hiring Incentives to Restore Employment (HIRE) Act was created to encourage businesses to hire unemployed workers. Qualified workers must be hired before year-end and cannot have been employed for more than 40 hours in the two months before their first workday.
HIRE provides two separate tax breaks.
- A payroll tax exemption: You pay no payroll taxes for the worker from March 19 through the end of 2010, up to $6,621 per worker.
- A tax credit for worker retention: On your 2011 income taxes, your business can claim a credit of up to $1,000 for each qualified worker you employed for a full year. The credit is 6.2 percent of wages paid, so a low-paid worker might mean a smaller credit.
Business tax expert Brandon Edwards of The Tax Credit Company says businesses can reap more if they study the rules and develop a consistent procedure for identifying qualified new hires. In addition, make sure each worker signs the required W-11 form.
“This is a terrific, unprecedented tax-incentive program that can increase cash flow immediately,” Edwards says. “But we’re seeing a lot of money being left on the table.”
Learn more at the IRS’s HIRE Act: Questions and Answers for Employers web page.
Business reporter Carol Tice contributes to several national and regional business publications.