New Tax Benefits for Hiring New Employees - Engine Builder Magazine

New Tax Benefits for Hiring New Employees

From TireReview.com

By Richard Lipton, CPA

These provisionsare part of the Hiring Incentives to Restore Employment (HIRE) Act
enacted into law by President Obama on Mar. 18.

Employers who hire unemployed 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 Mar. 18, 2010.

This reduced tax withholding will have no effect on the employee’s
future Social Security benefits, and employers would still need to
withhold the employee’s 6.2% 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 filling existing positions also
qualify but only if the workers they are replacing left voluntarily or
for cause. Family members and other relatives do not qualify.

In addition, the new law requires that the employer get a statement
from each eligible new hire certifying that he or she was unemployed
during the 60 days before beginning work or, alternatively, worked
fewer than a total of 40 hours for someone else during the 60-day
period. The IRS is currently developing a form employees can use to
make the required statement.

Businesses, agricultural employers, tax-exempt organizations, and
public colleges and universities all qualify to claim the payroll tax
benefit for eligible newly hired employees. Household employers cannot
claim this new tax benefit.

Employers claim the payroll tax benefit on the federal employment tax
return they file, usually quarterly, with the IRS. Eligible employers
will be able to claim the new tax incentive on their revised employment
tax form for the second quarter of 2010.

Revised forms and further details on these two new tax provisions will be posted on IRS.gov during the next few weeks.

 


Richard
L. Lipton CPA & Associates LLC, located in
Florham Park, N.J.,
draws on its founder’s 10 years as a stockholder and manager of
family-owned Sam’s Tire Co. in Paterson, N.J.

Richard
L. Lipton CPA & Associates LLC “is structured to personally serve
large and small clients who have a need for business consulting
services as well as accounting and tax services. We have even developed
a niche in the area of forensic accounting. Our clients have realized
that this combination of skills is extremely valuable in providing the
highest quality professional services in today’s and the future’s
economy.” – Richard L. Lipton CPA

 

Contact Richard L. Lipton CPA & Associates LLC:


Call: 973-
520-8123


E-mail:
[email protected]


Web:
www.liptoncpa.com

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