The credit is the lesser of 6.2 percent of wages paid to that employee over the 52 week period or $1,000. Employers will get the most out of the tax credits by hiring qualified workers sooner, rather than later, as the tax credits will reduce over time until they are completely diminished on or before January 1, 2011.
1. Employees hired between February 3, 2010, and January 1, 2011.
2. A newly hired employee that was unemployed or worked fewer than a total of 40 hours during the 60 consecutive days prior to starting the job.
3. Agricultural employers, tax-exempt organizations, public colleges and universities as well as taxable businesses qualify to claim the benefits.
1. Employees hired to replace an existing employee, unless the previous employee was terminated for cause or voluntary terminated employment.
2. Employees who are related to the employer.
3. Household employees.
4. Federal, state and local government employers.
The HIRE Act requires that employers obtain a signed affidavit from each eligible new hire to certify that he or she was either unemployed or worked less than a total of 40 hours during the 60 days prior to being hired. To meet this requirement the Internal Revenue Service [IRS] released Form W-11 on April 7, 2010. Qualifying new hires should complete form W-11 upon employment, and the form is to be kept on file by the employer along with other payroll income tax records.
Employers will then use their 2011 income tax return to claim the new hire retention credit and Form 941, Employer's Quarterly Federal Tax Return, to claim the payroll tax exemption. An employer may claim the payroll tax exemption for wages paid to qualified employees during the first quarter [only wages paid from March 19 through March 31, 2010 are eligible] on Form 941 for the second quarter of 2010. The amount of credit claimed on Form 941 for the second quarter will be refunded to the employer or may be applied against a liability for a later quarter.

1. "Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers." Internal Revenue Service. 18 Mar 2010. Web. 14 May 2010.
2. "FAQs About Claiming the Payroll Exemption." Internal Revenue Service. May 2010.
3. "FAQs About Qualified Employees." Internal Revenue Service. n.d. Web. 14 May 2010.
4. "FAQs About the Payroll Tax Exemption and Qualified Employers." Internal Revenue     Service. n.d. Web. 14 May 2010.
5. "2010 HIRE Act: Tax Breaks for Small Business." n.d. Web. 14 May 2010.

The HIRE Act creates incentive for businesses to hire unemployed individuals by providing payroll tax exemption for the employer's share of the Social Security taxes on wages paid to these employees. The tax exemption is effective for wages paid to qualifying employees from March 19,2010, through December 31, 2010. Employees' future Social Security benefits will not be affected by the exemption, and employers will still withhold the employee's share of Social Security, Medicare and income tax.
Businesses will also qualify for a general business tax credit, referred to as a new hire retention credit, for each qualified employee retained at least 52 weeks consecutively.  

The Hiring Incentives to Restore Employment [HIRE] Act was signed into law by President Obama on March 18, 2010. This new legislation provides employers with tax benefits directly related to hiring new employees.


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