Tax perks under HIRE Act may push out another six months

If Congess approves the proposed legislation, the tax benefits for hiring unemployed workers under the HIRE Act will be extended by six months. These benefits include a 6.2% payroll tax incentive for unemployed workers hired from February 3, 2010, to January 1, 2011, and a $1,000 general business tax credit for each worker who stays with your company for at least one year.

The HIRE Now Tax Cut Extension of 2010 would allow employers hiring qualified employees from July 22, 2010, through June 30, 2011, to tap into the HIRE ACT benefits for an additional six months. The hope is that the legislation will advance the nation’s economic recovery by trimming the costs associated with hiring. Claim your payroll tax exemption under the new HIRE Act with Form W-11.

We will continue to monitor the situation, so check back here for updates.

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Are you clear on who qualifies for the HIRE Act tax benefits?

Hiring and firing and the latest legalities along the way

Hiring to get a boost with tax breaks for employers

Tax perks under HIRE Act may push out another six months

Are you clear on who qualifies for the HIRE Act tax benefits?

To take advantage of the HIRE Act’s payroll tax exemption, you must have eligible new hires complete Form W-11. The form acts as a signed affidavit, certifying that the employee has not been employed for more than 40 hours during the 60-day period ending on the hire date.

Many employers pursuing this tax benefit continue to have questions, however. The IRS has responded by updating the HIRE Act FAQs on its website. Based on new details from the IRS, you should be aware that:

• As long as other requirements are met, self-employed individuals qualify, which makes you eligible for the payroll tax exemption if you hire an independent contractor as an employee.

• To meet the hiring date requirement of a qualified employee (hired after Feb. 3, 2010, and before Jan. 1, 2011), an individual’s start date must follow “general principles” relating to employment. Employment begins on the date when, based on specific facts and circumstances, the employer-employee relationship is first established.

• Generally, an employee does not qualify if he or she is hired to replace an existing employee unless the former employee 1) voluntarily terminated employment, 2) was terminated due to gross negligence, 3) was terminated for poor performance, or 4) was terminated in a reduction in force due to lack of work.

• A minor can sign the Form W-11.

The Downloadable Form W-11 from G.Neil includes a FREE Tip Sheet with helpful do’s and don’ts, and advice for identifying qualifying employees under the federal HIRE act.

Are you clear on who qualifies for the HIRE Act tax benefits?

Hiring and firing and the latest legalities along the way

In the HR world, two activities demand a lot of your time and attention – bringing new people on board, and letting people go. And not surprisingly, the recent recessionary crunch and temperamental job market have led to some legal changes that affect your hiring and firing practices. Here are some of the latest legal considerations – and the paperwork you need to stay on track.

Hiring – Claiming the payroll tax exemption under the HIRE Act

In a move to encourage recession-weary employers to hire again, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010. Under HIRE, qualified employers will receive two important tax breaks for hiring and holding onto previously unemployed workers:

A payroll tax exemption — An exemption from the 6.2% share of Social Security tax on wages paid to qualifying employees from March 19, 2010 through December 31, 2010

A new hire retention credit — A general business tax credit, up to $1,000, for each qualified employee retained for at least a year

You can now use the recently issued “HIRE Act Employee Affidavit,” or “Form W-11” to claim the payroll tax exemption. The main purpose of this form is to get qualified employees to state, by a signed affidavit and under penalties of perjury, that they have not been employed for more than 40 hours during the 60 days prior to beginning employment with you.

Take advantage of this exemption for newly hired, eligible employees with our Downloadable Form W-11.

For more information about the HIRE ACT, check out our HIRE Act FAQs.

Firing - Another short-term COBRA subsidy extension is in effect

In a now-familiar move with the COBRA subsidy, President Obama pushed out the eligibility date again. The bill extends the 15-month, 65% federal premium subsidy to employees laid off from April 1 through May 31, 2010. (The previous extension expired March 31.)

At the same time, President Obama urged lawmakers to pass legislation that would extend the COBRA premium subsidy to eligible individuals through the end of the year. While the Senate has cleared such a measure (Tax Extender Act of 2009), the House has not yet acted on it.

Inform employees of their COBRA rights with our Downloadable ComplyRight™ Initial Notification.

Hiring and firing and the latest legalities along the way

Hiring to get a boost with tax breaks for employers

With the economy crawling out of the shadows and showing signs of life again, so is hiring. We already learned that the U.S. economy posted its largest job gain in three years last month. And help is coming from the White House, too.

In a move to encourage recession-weary employers to step up their hiring efforts, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act in mid-March, 2010. Under HIRE, qualified employers will receive two important tax breaks for hiring and holding onto previously unemployed workers:

1) A payroll tax exemption - An exemption from the employer’s 6.2% share of Social Security tax on wages paid to qualifying employees from March 19, 2010 through December 31, 2010

2) A new hire retention credit – A general business tax credit, up to $1,000, for each qualified employee retained for at least a year

To support this hiring incentive and help employers claim the payroll tax exemption, the IRS has issued a draft form (“HIRE Act Employee Affidavit,” or “Form W-11”) to confirm that an employee is qualified. Keep in mind, though, that you can use another similar statement if it contains the same information as Form W-11.

The main purpose of this form is to get qualified employees to state, by a signed affidavit and under penalties of perjury, that they have not been employed for more than 40 hours during the 60 days prior to beginning employment with you.

Most eligible employers will then use Form 941, Employer’s Quarterly Federal Tax Return, to complete the payroll tax exemption claim – also available in draft form from the IRS.

And who is a “qualified employee,” you ask? That would be an individual who:

=> Starts working for you after February 3, 2010, and before January 1, 2011
=> Completes the signed affidavit
=> Is not replacing another employee unless that employee left voluntarily or for cause (such as downsizing)
=> Is not related to you

G.Neil will keep you informed about the HIRE Act and finalized versions of the related tax forms once they’re released. In the meantime, you can check out the FAQs on the IRS website.

Hiring to get a boost with tax breaks for employers