ConnectPay Partners Michael Young and Paul Altavena report that the IRS has released Form W-11 for employers use in order to be eligible to claim payroll tax exemptions for hiring new workers in 2010.
Paul Altavena states that The Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18 is designed to encourage employers to hire and retain new workers by providing a payroll tax exemption and the related new hire retention credit.Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, exempting them from the employer's share of Social Security tax on wages paid to these workers after March 18, 2010. The employee's 6.2 percent share of Social Security tax and the employer and employee's shares of Medicare tax still apply to all wages.
In addition to this tax, employers could also be eligible for a retention credit for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year. The new hire retention credit of up to $1,000 per worker can be claimed by employers on their income tax return. (See IRS frequently-asked questions for more details.)
Mr. Altavena further notes that this reduction will have no effect on the employee's future Social Security benefits.
Employee Requirements to Be Eligible To Claim the Credits.
Employers will use new Form W-11 to get a signed statement from each eligible new hire, certifying under penalties of perjury, that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer. Employers do not file these forms with the IRS but must retain them along with other payroll and income tax records.
Employees That Qualify:
Michael Young explains that new hires filling new positions qualify. But, employees filling existing positions if they are replacing workers who left voluntarily or who were terminated for cause also qualify. He notes that family members and other relatives do not qualify for either of these tax benefits.
Which Employer Types Qualify?
Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible. Tax-exempt organizations, agricultural employers, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees.
ConnectPay can help!
Employers using the ConnectPay services simply provide a copy of the completed and signed W-11 to ConnectPay and we do all the rest.
Eligible employees with a signed Form W-11 submitted to ConnectPay will be tagged for the credit. Employers taxes will be collected and paid accordingly under the guidelines of the HIRE Act. Second Quarter 941’s have been revised by the IRS and will be completed with the correct information for second quarter along with a credit for first quarter (if applicable). Contact us today for more information on how to let ConnectPay be your complete payroll, time and attendance, HR , Workers Comp and benefit service provider.
Did you find this site informative and helpful?
