Vision Payroll

March 24, 2010

Tip of the Week: Employers May Elect to Have HIRE Act Exemption Not Apply

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Employers who claim the exemption under the HIRE Act may not claim the Work Opportunity Tax Credit with respect to wages paid for which the HIRE Act exemption is claimed. The Internal Revenue Service (IRS) is authorized under the HIRE Act to prescribe the manner for making an election to have this section of the HIRE Act not apply. Employers who would receive greater benefit under the Work Opportunity Tax Credit should consider making the election. Vision Payroll strongly recommends that employers consult their income tax advisor before claiming the exemption or electing not to claim the exemption under the HIRE Act.

March 23, 2010

HIRE Act Exemption Begins March 19, 2010

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Exempt wages are those paid “with respect to employment during the period beginning [March 19, 2010] and ending on December 31, 2010.” The “with respect to employment” phrase seems to indicate that employers will be able to claim exemption for wages paid at any time as long as the employment period for which the wages were earned is before January 1, 2011. Therefore, wages paid during 2011 may also qualify if paid “with respect to employment” during 2010. Contact Vision Payroll if you have further questions on the HIRE Act.

March 22, 2010

Many Employers Eligible for HIRE Act Exemption

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Most employers are eligible for this exemption. According to the HIRE Act, a “qualified employer” is any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing, although “a public institution of higher education (as defined in section 101(b) of the Higher Education Act of 1965)” also is a qualified employer, even if a public institution. Contact Vision Payroll if you have further questions on the HIRE Act.

March 21, 2010

Certain Replacement Employees Not Eligible for HIRE Act Credit

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Employees are not eligible under the HIRE Act if the employee is “employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause.” Therefore, employers may not simply terminate employees and replace them with otherwise qualified individuals and qualify for the exemption. Contact Vision Payroll if you have further questions on the HIRE Act.

March 20, 2010

Certain Relatives Not Eligible for HIRE Act Credits

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Under the HIRE Act, certain related individuals as described in §51(i)(1) of the Internal Revenue Code of 1986, as amended (IRC), do not qualify as eligible workers. Therefore, most family members will not qualify under the HIRE Act based on the IRC §51(i)(1). Contact Vision Payroll if you have further questions on the HIRE Act.

March 19, 2010

Question of the Week: How Do We Know if an Employee Qualifies Us for the New Payroll Tax Credit for Hiring Unemployed Workers?

This week’s question comes from Donna, an HR Director. I read how we can get a payroll tax credit for hiring unemployed workers. How do we know if an employee qualifies us for the new payroll tax credit for hiring unemployed workers? Answer: The Internal Revenue Service (IRS) has released IR-2010-033, Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers. In it, the IRS explains that under the HIRE Act, employers will be 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.” The IRS will provide a form that employers may use to obtain the certification from employees. Contact Vision Payroll if you have any questions on the new credits.

March 17, 2010

Tip of the Week: Jobs Bill to Provide Tax Relief to Employers

HR 2847, An Act making appropriations for the Departments of Commerce and Justice, and Science, and Related Agencies for the fiscal year ending September 30, 2010, and for other purposes, was passed by Congress and sent to President Barack Obama who indicated he will sign it March 18, 2010. The law, also called the Hiring Incentives to Restore Employment Act or HIRE Act, allows employers who hire employees after February 3, 2010 (and before January 1, 2011) who were unemployed for sixty days in the period from February 3, 2010 to December 31, 2010 to not pay the employer portion of the social security tax (6.2% of taxable earnings). Employers must still collect and pay the employee portion of the social security tax. Additionally, the employer and employee portion of the Medicare tax must still be collected and paid for all employees. The Internal Revenue Service (IRS) is not planning to change the Form 941 for the first quarter 2010 (the three months ended March 31, 2010). Credits for taxes paid in this quarter will be available on the Form 941 filed for the second quarter 2010. The credit amount would be treated as an additional payment for the second quarter 2010. Employers who employ such qualifying individuals for a fifty-two week period would also be eligible for a $1,000 credit against income taxes. Contact Vision Payroll if you have any questions on the new law.

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