A Reminder Before Filing Your 2011 Business Income Tax Return
If your business took advantage of the Hiring Incentives to Restore Employment Act (HIRE Act) which was enacted in March 2010, you may now qualify for another tax break – the New Hire Retention Credit.
The HIRE Act was designed to restore jobs lost during the economic downturn by providing a temporary social security tax exemption for employers on wages paid to new hires. To qualify, new hires had to start between 2/4/10 and 12/31/10 and could not be employed for more than 40 hours during the 60-day period ending on their start date. They also could not replace another worker unless that person quit voluntarily or was discharged for cause.
If you have retained any of your employees hired under the HIRE Act for a minimum of 52 consecutive weeks, it is now time to claim the Retention Credit on your 2011 business income tax return. In addition to retaining the employee for at least 52 weeks, you must also have paid wages such that total wages in the final 26 weeks were at least 80% of the total wages paid during the first 26 weeks of employment.
The tax credit for qualified retention is worth 6.2 percent of wages paid to the employee or $1,000 – whichever amount is less. If you are unsure whether an employee qualifies under the New Hire Retention Credit, you can check the criteria by using IRS Form W-11. Click the link below for details.