To: ECA Members
From: Electrical Contractors’ Association
Re: New Hire Act of 2010 / Retained Worker Business Credit
Listed below is information regarding the New Hire Act of 2010, as well as the Retained Worker Business Credit. Please consult the IRS website at: www.irs.gov. for specific information. The following includes excerpts from the website that may prove useful.
Employers may qualify for two new tax breaks when they hire someone who has not worked for more than 40 hours in the past 60 days. These breaks are part of the Hiring Incentives to Restore Employment (HIRE) Act. Here’s what you should know:
6.2 percent payroll tax exemption
You may be exempt from your 6.2 percent share of social security tax on wages paid to qualified employees, effective for wages paid from March 19, 2010, through December 31, 2010. Most employers will claim it on Form 941, Employer’s QUARTERLY Federal Tax Return, beginning with the second quarter of 2010. The exemption will also be claimed on annual payroll tax returns such as Form 944, Employer’s ANNUAL Federal Tax Return.
Tax credit up to $1,000 per worker -- Retained Workers Business Credit
Qualified employers
You may qualify for these tax breaks if you are a small or large business, tax-exempt organization, public college or university, Indian tribal government or farmer. But household employers and federal, state and local government employers, other than public colleges and universities, do not qualify.
Qualified employees
Generally, those beginning employment with you after February 3, 2010, and before January 1, 2011, who were either unemployed or worked 40 hours or less for anyone during the previous 60 days can qualify. You must get a Form W-11, or similar signed affidavit, from new hires certifying they were not employed for more than 40 hours during the 60 days before beginning employment.
Again, the Employee Affidavit form is Form W-11. It clarifies the definition of a “qualified employee” as someone who:
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certifies by signed affidavit, or similar statement under penalties of perjury, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins employment with you;
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is not related to you. An employee is related to you if he or she is your child or a descendent of your child, your sibling or stepsibling, your parent or an ancestor of your parent, your stepparent, your niece or nephew, your aunt or uncle or your in-law. An employee also is related to you if he or she is related to anyone who owns more than 50% of your outstanding stock or capital and profits interest or is your dependent or a dependent of anyone who owns more than 50% of your outstanding stock or capital and profits interest.
Please consult your firm’s accountant, as well as visit the IRS website at: www.irs.gov for further details regarding applicability to the HIRE Act Payroll Tax Credit and the Retained Workers Business Credit.
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