Hiring Incentives to Restore Employment (H.I.R.E.) Act
New tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law March 18, 2010.
Employers who hire un-employed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2% payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax with-holding will have no effect on the employee’s future Social Security benefits, and employers would still need to with-hold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.
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.
The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires qualify if the workers they are replac-ing left voluntarily or for cause. Employers claim the payroll tax benefit on the federal employment tax return they file, usu-ally quarterly, with the IRS.