President Barack Obama has signed legislation that gives two new tax benefits to employers hiring workers who were previously unemployed or only working part time. The tax breaks are part of the Hiring Incentives to Restore Employment (HIRE) Act.
Employers who hire unemployed workers after February 3, 2010 and before Jan. 1, 2011, may qualify for a 6.2-percent payroll tax incentive (their share of Social Security taxes on wages paid to these workers after March 18, 2010).
To qualify for the tax benefit, the employer must get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.
In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.
New hires who fill existing positions also qualify but only if the workers they are replacing left voluntarily or for cause.
Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010.