On March 18, 2010, the Hiring Incentives to Restore Employment (HIRE) Act was enacted. Compared to other recent tax legislation, this bill is relatively simple to understand.

Employers who hire unemployed workers between February 3, 2010 and January 1, 2011 may qualify for a payroll tax credit equal to their share of the FICA tax due on those employees. Medicare taxes must still be paid. The credit can be claimed beginning on the applicable second quarter employment tax form. Additionally if those new hires are maintained on the payroll for a full year, the employer may claim an additional $1,000 general business (income tax) credit for each of those workers.

The rules state that the new hire must sign an affidavit (Form W-11) that they’ve been unemployed (worked less than 40 hours for all other employers) during the last 60 days. In addition, they must be filling a new position or replacing a worker who left voluntarily or for cause; close relatives don’t count as new hires.

Businesses, agricultural employers, tax-exempt organizations, and public colleges and universities are all eligible for the credit, but household employers do not qualify.

 If you have any questions, give us a call at (904) 396-5400.

Filed under: Tax by Mark Patrick