In IR 2010-64, the Internal Revenue Service recently issued a newly revised payroll tax form that most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010.
The Hiring Incentives to Restore Employment (HIRE) Act was designed to encourage employers to hire and retain new workers as well as create a payroll tax exemption and new hire retention credit. The bill was signed by President Obama on March 18.
Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits. The employee’s 6.2 percent share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages.
In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return.
Other Related IRS Resources:
Answers to Frequently Asked Questions
Form W-11 – Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit