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The HIRE Act and How It May Impact Your Business (update)

By May 1, 2010January 31st, 20142010, Tax Tips

Click for a new form W-11 to be used as an affidavit for new employees to complete and sign if they are eligible for the new HIRE credit.

Employers do not have to pay the matching Social Security tax (6.2%) on the wages of workers hired after February 3, 2010 if they worked less then 40 hours in the previous 60 days. The exemption applies to wages paid after March 18, 2010 and before January 2, 2011.

The exemption is claimed on Form 941. The 6.2% exemption for qualified wages the employers pay from March 19 through March 31 will be claimed on the 941 for the second quarter. IRS is revising the 941 form to reflect the exemption. In the interim, employers can reduce their tax deposits by the amount of the exemption or elect to receive the overpayment their 941.

W-2 reporting will be affected, too. The amount of wages that are excluded from Social Security tax under the new law will be listed in box 12, using code CC.

There will also be a credit if the individual remains with the employer for 52 consecutive weeks. This business credit will be the lesser of $1,000 or 6.2 percent of the wages paid by the employer to the retained worker during the 52 consecutive week retention period.

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