Anyone who has been even semiconscious over the past few months knows that the Congress recently passed healthcare reform legislation. The two pieces of legislation are long and complicated and touch upon several areas, some of which have nothing to do with healthcare. I published a special healthcare edition of my newsletter this week summnarizing the parts of the legislation important to employers--and whether you offer healh insurance benefits to your employees or not, there were portions of the bill that you need to be aware of.
Iin the turmoil surrounding the healthcare legislation, the information on the HIRE Act was lost. President Obama signed the HIRE (Hiring Incentives to Restore Employment Act) on March 18. Although the HIRE Act is not as life altering as the healthcare reform legislation, it is important employers learn about some of the provisions in the legislation as it has the potential to save them money.
Under the HIRE Act, the employer of a “qualified employee” is excused from paying the employer match for the 6.2% Social Security portion of that employee’s wages in 2010.
A qualifying employee is one who is hired after Feb. 3, 2010 and before Jan. 1, 2011, is not hired to replace another employee, is not related to the employer, and certifies under penalty of perjury that he or she has not been employed for more than 40 hours during the 60-day period ending on the date that employment begins with the new employer. This incentive can save the employer up to $6,621.60 for each qualified employee hired (6.2% of the maximum Social Security withholding for 2010.)
Employers also can receive a tax credit on their 2011 return for each new employee hired and retained for 52 weeks under certain criteria; that credit is the lesser of $1,000 or 6.2% of the wages paid to the employee for those 52 weeks.
These tax incentives are meant to spur job creation, especially for small businesses who are undecided about whether to begin to ramp up company-building efforts in light of recent economic difficulties.
One cannot justify hiring just to receive these tax benefits, but if the economic decision is close, these incentives might allow business to hire sooner.
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