By Debra Dawahare
The HIRE (Hiring Incentives to Restore Employment) Act, signed into law on March 10, 2010, gives a tax break to businesses that hire unemployed workers before January 1, 2011.
To qualify the employer for the benefit, the new employee must sign an affidavit saying that he or she was employed for 40 hours or less during the 60 days before the new employment began, and the hiring must occur after February 3, 2010 but before January 1, 2011. The new employee must not replace another employee, unless that employee voluntarily quit or was dismissed for cause.
While the employer will still have to withhold Social Security taxes for the new employee, HIRE provides that the employer will get a tax credit for it, beginning in the second quarter of 2010. Previous rules regarding the employer’s share paid for Medicare taxes will still apply.
If the business retains the new employee for 52 weeks, it will receive a one-time tax credit for such retention.
Employers should check with their CPAs or tax attorneys regarding HIRE’s potential benefits for them.