Vision Payroll

December 1, 2010

Tip of the Week: IRS Releases 2010 Form 944

IRS Commissioner Douglas H. Shulman
IRS Commissioner Douglas H. Shulman
The Internal Revenue Service (IRS) has released the 2010 Form 944, Employer’s ANNUAL Federal Tax Return, and related instructions. Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will only file once a year instead of every quarter.

Several Changes Have Been Made To the 2010 Form 944

The 2010 Form 944 has several new items. The new items include the following:

Qualified Employer’s Social Security Tax Exemption

Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010, and before January 1, 2011.

Qualified Employer’s Social Security Tax Credit

Qualified employers are allowed a credit for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 18, 2010, and before April 1, 2010.

COBRA Premium Assistance Credit Extended

The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months.

Social Security Wage Base for 2010 and 2011

Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.

Advance Payment of Earned Income Credit (EIC)

The option of receiving advance payroll payments of EIC expires on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who receive advance payments of EIC in 2010 must file a 2010 federal income tax return.

Electronic Deposit Requirement

The IRS has issued proposed regulations under §6302 of the Internal Revenue Code of 1986 which provide that beginning January 1, 2011, you must deposit all depository taxes (such as employment tax, excise tax, and corporate income tax) electronically using the Electronic Federal Tax Payment System (EFTPS). Under these proposed regulations, which are expected to be finalized by December 31, 2010, Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010.

Vision Payroll Will File Form 944 for Eligible Taxpayers

Contact Vision Payroll if you have further questions on Form 944.

October 15, 2010

Question of the Week: What Is the Impact of a Temporary Layoff on the HIRE Act Incentives?

What is the Impact of Temporary Layoff on the HIRE Act Incentives?
What is the Impact of Temporary Layoff on the HIRE Act Incentives?
This week’s question comes from Andrea, an HR director. We hired an employee who qualified for the HIRE Act Incentives, including payroll tax forgiveness. We had to lay him off temporarily and don’t know if he still qualifies under his previous layoff or if he needs to requalify. What is the impact of temporary layoff on the HIRE Act incentives? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes and may receive other tax benefits. In order to qualify under the HIRE Act, employers are required to “get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.” Workers who are temporarily laid off may or may not have to requalify and fill out a new Form W-11 or the Spanish-language equivalent, Form W-11(SP).

IRS Addresses Issue in Information Letter 2010-0198

The Internal Revenue Service (IRS) addressed this issue in Information Letter 2010-0198. According to the IRS:

An individual who is already a qualified employee and who experiences a short term or temporary interruption in his or her performance of services continues to be a qualified employee unless the interruption constitutes a termination of employment. Whether a short term or temporary interruption of an employee’s performance of services constitutes a termination of employment depends on the facts and circumstances. In the case of an individual who was previously employed as a qualified employee and whose employment is terminated, the employee will have to again meet the requirements for qualified employee status at the time the employment relationship is reestablished.

Documentation Is Key to Support Employer Position

Vision Payroll recommends that employers document thoroughly why a “temporary interruption” was not a termination of employment if they do not requalify an employee under the HIRE Act. Consultation with a qualified labor law attorney to determine when employment terminates is strongly recommended.

August 2, 2010

IRS Releases Spanish Language Form W-11

Form W-11(SP) Now Available Spanish Version of Hire Act Form W-11 for Payroll
Form W-11(SP) Now Available
The Internal Revenue Service has released Formulario W-11(SP), Declaración Jurada del Empleado Conforme a la Ley de Incentivos para la Contratación y la Recuperación del Empleo (HIRE). This form is a Spanish-language version of Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, and may be used by employers to certify worker eligibility for payroll tax forgiveness under the HIRE Act. Employers are not required to use the official form and may use another similar statement if it contains the same information and the employee signs it under penalties of perjury. Contact Vision Payroll if you have any further questions on Form W-11 or Formulario W-11(SP).

June 11, 2010

Question of the Week: What is the Deadline for Obtaining Form W-11?

This week’s question comes from Paul, a business owner. I have an ex-employee who qualifies for payroll tax forgiveness under the HIRE Act. We haven’t been able to get the signed Form W-11 yet. What is the deadline for obtaining Form W-11? Under the HIRE Act, for otherwise qualifying employees, employers are not required to pay the matching portion of OASDI or social security tax. Qualified employees must sign Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, to allow employers to claim the payroll tax forgiveness. Employers must obtain the signed Form W-11 before claiming any payroll tax forgiveness. Therefore, to claim the exemption for the second quarter of 2010, employers must obtain the signed Form W-11 before August 3, 2010 in order to file by the deadline of August 2, 2010. Employers that made timely deposits in full payment of their taxes for a quarter have ten more days after the due date to file Form 941, Employer’s QUARTERLY Federal Tax Return. Employers that do not receive signed Form W-11 until after they’ve filed Form 941 may not claim the payroll tax forgiveness on Form 941, but must file Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund, to claim the exemption. Contact Vision Payroll if you have further questions on the deadline for obtaining Form W-11.

June 4, 2010

Question of the Week: Can My Spouse’s Wages Qualify for Payroll Tax Forgiveness?

This week’s question comes from Lynn, a business owner. I recently hired my spouse to work in my sole proprietorship. My spouse qualifies using Form W-11, but I’m not sure if my spouse is considered my relative. Can my spouse’s wages qualify for payroll tax forgiveness? Answer: Under the Hiring Incentives to Restore Employment (HIRE) Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. Certain relatives of the taxpayer, as defined in §152 of the Internal Revenue Code of 1986 (IRC) are not eligible for the payroll tax forgiveness or the credit. They are:

  • A child or a descendant of a child.
  • A brother, sister, stepbrother, or stepsister.
  • The father or mother, or an ancestor of either.
  • A stepfather or stepmother.
  • A son or daughter of a brother or sister of the taxpayer.
  • A brother or sister of the father or mother of the taxpayer.
  • A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
  • An individual (other than an individual who at any time during the taxable year was the spouse, determined without regard to [IRC] §7703, of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.

Since a spouse is not on the list of ineligible employees, wages paid to spouses of sole proprietors who otherwise qualify are eligible for payroll tax forgiveness and potentially the retention credit. Contact Vision Payroll if you have any further questions on HIRE Act.

May 28, 2010

Question of the Week: Is There a Spanish Form W-11 Available?

This week’s question comes from Mike, a small-business owner. We have hired some employees whose native language is Spanish. They are better able to understand forms in Spanish than they are in English. We need them to complete Form W-11 in order to claim payroll tax forgiveness on Form 941. Is there a Spanish Form W-11 available? Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is used to certify worker eligibility for payroll tax forgiveness under the HIRE Act. At the present time, the Internal Revenue Service (IRS) has not released a Spanish version of Form W-11. Contact Vision Payroll if you have any further questions on Form W-11.

***Please see updated information regarding the release of the Spanish version of Form W-11.

April 16, 2010

Question of the Week: What Information Do I Need to Provide to Vision Payroll to Qualify for the HIRE Act Credit?

This week’s question comes from Dan, a small-business owner. I have several employees that I hired who have signed Form W-11. What information do I need to provide to Vision Payroll to qualify for the HIRE Act Credit? Answer: Under the HIRE Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. The Internal Revenue Service (IRS) has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit that employers must have signed by eligible employees to claim the credit. Once an employer has obtained a signed form from an employee, contact Vision Payroll to inform us that the employee is eligible for the credit. Vision Payroll will work with employers to determine the eligible wages already paid in 2010 and ensure that future wages are not taxed. Contact Vision Payroll if you have further questions on the HIRE Act Credit.

April 7, 2010

Tip of the Week: IRS Releases Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit

The Internal Revenue Service (IRS) has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Employers can use Form W-11 to confirm that an employee is a qualified employee under the HIRE Act. Alternatively, they can use another similar statement if it contains the same information and the employee signs it under penalties of perjury.

Only employees who meet all the requirements of a qualified employee may complete this affidavit or similar statement. You cannot claim the HIRE Act benefits, including the payroll tax exemption or the new hire retention credit, unless the employee completes and signs this affidavit or similar statement under penalties of perjury and is otherwise a qualified employee.

A “qualified employee” is an employee who:

  • Begins employment with you after February 3, 2010, and before January 1, 2011;
  • Certifies by signed affidavit, or similar statement under penalties of perjury, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins employment with you;
  • Is not employed by you to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing); and
  • Is not related to you. An employee is related to you if he or she is your child or a descendent of your child, your sibling or stepsibling, your parent or an ancestor of your parent, your stepparent, your niece or nephew, your aunt or uncle, or your in-law. An employee also is related to you if he or she is related to anyone who owns more than 50% of your outstanding stock or capital and profits interest or is your dependent or a dependent of anyone who owns more than 50% of your outstanding stock or capital and profits interest.

Contact Vision Payroll if you have further questions on the HIRE Act. If you prefer, you can attend one of our upcoming seminars that will cover what you need to know about the HIRE Act.

April 2, 2010

Question of the Week: When Will the HIRE Act Affidavit Form Be Available?

This week’s question comes from Andrew, a company president. We know that we can receive a payroll tax exemption and income tax credit under the HIRE Act if we hire certain unemployed workers. We need qualified employees to sign an affidavit to prove they are eligible. When will the HIRE Act affidavit form be available? Answer: The Internal Revenue Service (IRS) has released a draft Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Under the HIRE Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. A final Form W-11 is expected to be released by the IRS during the week of April 4, 2010. Contact Vision Payroll with further questions on the HIRE Act.

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