HIRE Act: Incentives to Hire Now

The “Jobs Bill” (Hiring Incentives to Restore Employment Act or HIRE) was just signed into law and the U.S. government has created some attractive incentives under this law to get you to hire employees now.

HIRE Act – “Jobs Bill”

The key provisions of this bill include:

Eliminating the 6.2% employer social security tax on eligible hires. An employer can save up to $6,622 in employer social security tax for each qualified hire. No limit to the total new hires.
A one-time business tax credit for retaining eligible employees for 52 consecutive weeks, up $1,000 per employee.
The credit is for eligible employees hired after February 3, 2010, but only wages paid between March 19, 2010 and December 31, 2010 are eligible.
Eligible employees include:
- People employed in the period outlined above.
- People who have NOT been employed for more than a total of 40 hours during the previous 60 days.
- People who are not family members of the business owner.
- People who are not a household or government employee.
You can hire into a new position, or may replace another employee, only if the previous employee separated from employment voluntarily or for cause.
A new Form 941 will be updated to account for the tax credits beginning with the second quarter form. First quarter wages and credits will also be reported on the second quarter form.
Employers can reduce their federal deposit amounts throughout the quarter by the eligible employer social security tax amount, or they can wait to claim the credit on their Form 941 return.
Employees must attest to the employer that they were not employed for more than 40 hours over the previous 60 days. New IRS Form W-11, Hiring Incentives to Restore Employment Act Employee Affidavit may be used or employers may create their own version as long as the wording is identical to the IRS version. The attestation should be retained by the employer for possible future audit and not filed with the IRS.