Tax

Summary of Hiring Incentives to Restore Employment Act (HIRE Act)

Posted by Shinn & Company 4/22/10

The HIRE Act was signed into law on March 18, 2010.

Section 179 (§179)

• §179 expensing was amended to the 2009 levels
• Due to be reduced for 2010 to $134,000
• $250,000 total allowable deduction with the $800,000 maximum threshold

Incentives for Hiring and Retaining Unemployed Workers (payroll tax forgiveness for hiring unemployed workers)

• Allows employer a "forgiveness" for employer's share of the Social Security payroll tax (6.2%) when they hire "qualified workers." Effective for wages paid 3/19-12/31/10.

Qualified employees:
-Begins employment after 2/3/10 and before 1/1/11
-Employee certifies that they have not been employed for more than 40 hours during the 60-day period prior to the date of hire (signs Form W-11)
-Employee was not hired to replace another employee unless the other employee separated voluntarily or for cause
-Previous employees may qualify
-Downsizing (and subsequent hires) are still eligible
-Employee is not related (child, parent, descendent of child, sibling, niece, nephew - fairly inclusive)

Employee completes Form W-11 - employer keeps the form; does not have to send with Form 941.

The payroll "forgiveness" is taken on Form 941.

• New Hire Incentive Credit
-Credit of 6.2% of wages paid to the qualified employee over the 52-week period
- Employee must be retained for 52 weeks
- Maximum credit of $1,000 per worker
- Taken when the 2011 income tax return is prepared
- General business credit

For more information on the HIRE Act, visit www.irs.gov

Click here to access the IRS forms library.