If so, there is now a tax credit that companies can take advantage of through the Hiring Incentive to Restore Employment Act (HIRE). Employers are encouraged to make hiring, pay and retention decisions as soon as possible, as the HIRE Act provides greater benefits to those employers that hire early and that substantially maintain their new hires’ wages.
On March 18, 2010, President Obama signed the Hiring Incentive to Restore Employment Act. Intended to spur employment, this statute creates significant tax incentives for employers to hire and retain workers. It applies to all for-profit and non-profit employers, regardless of size, and including public institutions of higher education. The HIRE Act exempts employers from Social Security taxes in 2010 with regard to each new employee who meets the following criteria:
• Begins employment after February 3, 2010 and before January 1, 2011;
• Certifies by signed affidavit, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date when he or she begins the new employment.
The HIRE Act also increases the current year business credit with respect to each new hire who is retained for a full year, provided that the employee:
• Was hired by the taxpayer on any date during the taxable year ending after March 18, 2010;
• Was employed by the taxpayer for a period of not less than 52 consecutive weeks; and
• Whose wages during the last 26 weeks of this employment equal at least 80% of the wages for the first 26 weeks of this employment.
The tax credit for each retained worker is increased by 6.2% of the wages paid to the retained worker during the consecutive 52-week period. If an employer paid an employee $53,400 from now until the end of the year, it could save a maximum of $3,310. An additional $1,000 income tax credit is available to employers for every new employee retained for 52 weeks, to be taken on the employer’s 2011 income tax. Please contact your tax advisor or Ipswich Bay Advisors (978-777-6554) with any questions.