News
New Legislation!
Two new pieces of legislation , the "Jobs Bill" (Hiring Incentives to Restore Employment Act or HIRE) and Healthcare Reform, were recently signed into law. Our firm is closely monitoring these for the most up-to-date information to help you stay informed. Here is what you need to know:
HIRE Act (Jobs Bill)
The key provisions of this bill include –
Payroll Tax Forgiveness
– eliminates the 6.2% employer social security tax on eligible hires. Eligible hires are defined as newly hired individuals who were unemployed for 60 or more days before their start date and who did not work more than 40 hours during that 60 day period.
a) The newly hired employee must complete IRS Form W-11 certifying to that fact. The forgiveness of the employer’s social security tax is only available for eligible employees hired after February 3, 2010, for wages (and tips) paid between March 19, 2010 and December 31, 2010.
b) Tax forgiveness does not apply for hiring relatives or unrelated individuals who are a dependent who live in the employer’s household or employees who directly or indirectly own more than 50% of the business.
c) A new Form 941 will be updated to account for the tax forgiveness with the second quarter 2010 form.
d) Other restrictions may apply.
Maximum $1,000 Credit For Each "Retained Worker"
- is any newly hired individual as explained above who is employed for 52 weeks. The wages paid in the last 26 weeks of the period must equal at least 80% of the wages paid in the first 26 weeks of the period. The credit will be claimed on the employer’s 2011 tax return and for each eligible employee the credit is the lesser of 6.2% of their wages or $1,000. Other limitations may apply.
Small Employer Health Insurance Tax Credit
- Effective 1/1/2010 to 12/31/2013, qualified small employers (employers who employ no more than 25 "full-time equivalent" employees (FTE) and pay annual FTE wages that average $50,000 or less and have a qualified health insurance plan that requires the employer to pay at least 50% of the premiums on behalf of all of its employees who enroll in the plan) are entitled to a credit of up to 35% (25% for tax-exempt organizations) of the employer’s premiums.
- Businesses with fewer than 10 FTE workers and average annual FTE wages of less than $25,000 would receive a full credit of 35% (or 25% if tax-exempt).
- The employer’s income tax deduction for health insurance premiums paid is reduced by the amount of the credit.
- Self-employed individuals, including partners, sole proprietors, more than 2% S corporation shareholders, and more than 5% owners of C corporations and dependents of any of these individuals, are not treated as employees. The hours they work and their wages are not taken into account in determining FTE employees and wages, and no credit is available for their insurance.
- Businesses with fewer than 10 FTE workers and average annual FTE wages of less than $25,000 would receive a full credit of 35% (or 25% if tax-exempt).
- The employer’s income tax deduction for health insurance premiums paid is reduced by the amount of the credit.
- Self-employed individuals, including partners, sole proprietors, more than 2% S corporation shareholders, and more than 5% owners of C corporations and dependents of any of these individuals, are not treated as employees. The hours they work and their wages are not taken into account in determining FTE employees and wages, and no credit is available for their insurance.
Details on how to calculate this credit are continuing to be developed by Congress and IRS.
Also be sure to check out IRS information regarding these two peices of legislation here and here.
