Dear InterMicro
Customer,
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 on 3/18/2010.
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, in
effect exempting them from their share of Social
Security taxes on wages paid to these workers after
March 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-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.
Form 941, Employer's Quarterly Federal Tax Return,
will be revised for second quarter filings. Any
first quarter credit amounts would be treated as a
payment for the second quarter and would need to be
claimed on the second quarter Form 941 filing. In
addition:
--The 2010 Form W-2 will have a box 12, code "CC"
added for reporting HIRE Act exempt wages and tips
for qualified employees.
-- Form W-3 also will have a line added.
-- The first quarter exempt amounts are to be
treated as a payment made on the first day of the
second quarter on the revised Form 941, just like
the current COBRA subsidy tax credit.
-- For the following quarters, employers will report
total amounts on the first page of Form 941, and
reduce the liability on Schedule B, Form 941, by the
amount of the tax reduction.
Qualified employees will need to complete a Form
W-11. The form is to confirm that the new hire is a
qualified employee under the HIRE Act. Employers
cannot claim HIRE Act (Pub. L. No. 111-147)
benefits, including a payroll tax exemption or a
new-hire retention credit, unless the employee
completes and signs the affidavit or similar
statement. The form is to be kept on file by the
employer.
A draft of the 941 and the W-11 are available on the
IRS website.
http://www.irs.gov/businesses/small/article/0,,id=220745,00.html?portlet=7
What you
can do now
As we await additional information from the
Government our suggestion eligible employees is to:
1.) Keep tax calculations unchanged in the
software.
2.) From the W-11's you have on file establish a
list of employees who qualify for the credit.
3.) At the end of every quarter, go thru those
employees and see how much employer OASDI was paid.
4.) The dollar amount that the accounting system
calculated would be the amount you could claim as
credit on your Q2 941 (and subsequent 941s)
5.) Make a manual adjustment to GL when you take
this credit.
We strongly recommend that you review the
instructions and qualifications from the IRS.
www.irs.gov
