Hire Act of 2010-Payroll Information You Should Know
Posted by Mariann Goff on Thu, Jul 01, 2010
Has your bookkeeper or your payroll company told you about the Hire Act of 2010? If you hire a new employee between February 3, 2010 and January 1, 2011 your company may be exempt from paying the employer Social Security tax on wages paid from March 19, 2010 to December 31, 2010. This represents a savings of 6.2% of payroll tax on gross wages paid to qualified employees.
Determining Qualification Status
To qualify for the tax exemption, the new employee must have been unemployed or employed for less than 40 hours for a continuous 60 day period prior to being hired by you. Recent high school and college graduates who did not work because they were in school also qualify under the Act. There are other requirements. The newly hired individual must not be a family member and must not be replacing another worker for the sole purpose of claiming the tax exemption.
What Needs to Be Done?
What documentation must the new employee complete? IRS Form W-11 must be completed by the employee and maintained with company payroll records.
What documentation must the employer complete? The IRS has produced a revised Form 941 that takes into consideration the payroll credit.
If you outsource your payroll, your payroll processor will complete the correct 941 form for you.
Would you like more information about the Hire Act?
For answers to your questions about the Hire Act and other Payroll Processing Questions Contact Mariann at Back Office Works, LLC.