IRS: Form is Ready for 'HIRE Act' Employer Tax Break

Small business hiringThe form to help employers claim the payroll tax exemption under the newly enacted jobs incentive law, or HIRE Act, is now available, the Internal Revenue Service said today.
Form W-11 serves as an “Employee Affidavit” under the HIRE (Hiring Incentives to Restore Employment) Act signed into law by President Obama March 18.
The law requires that employers get a statement from each eligible new hire that certifies – under penalties of perjury – that the he or she was unemployed during the 60 days before beginning work or “worked fewer than a total of 40 hours for anyone during the 60-day period,” the IRS said.
The HIRE Act provides two primary tax breaks to small business owners.
Employers who hired jobless workers after Feb. 3, 2010, and before Jan. 1, 2011, can qualify for a 6.2-percent payroll tax incentive. It waives the employer’s share of social security tax on wages paid to these workers.
The incentive will have no effect on the employee’s future Social Security benefits. Employers still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes.
Additionally, businesses can claim a new hire “retention credit” of up to $1,000 for each worker who is retained. They can start doing so when filing next year’s income tax returns.
New employees hired to fill existing positions also qualify, but only if the workers they are replacing “left voluntarily or for cause.” Relatives do not qualify for either of the tax incentives.
“These tax breaks offer a much-needed boost to employers willing to expand their payrolls, and businesses and nonprofits should keep these benefits in mind as they plan for the year ahead,” IRS Commissioner Doug Shulman said in a statement last month.
The IRS has created a frequently-asked questions page on HIRE Act incentives.

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