New Law Gives Huge Tax Breaks to Companies who Hire Veterans
On March 18, 2010, President Obama signed the new Hiring Incentives to Restore Employment Act (HIRE) into law. This federal legislation creates brand-new tax breaks for hiring and retaining unemployed workers.
Here’s a quick CCG overview on this job creation tax break.
Employers Get a Payroll Tax Holiday for New Hires — Plus a Potential Tax Credit Bonus.
Normally, an employer is required to pay its share of Social Security taxes on wages earned by employees. For 2010, the portion of the tax is 6.2 percent on the first $106,800 of wages.
Under the HIRE Act, an employer is effectively excused from paying its share of the 6.2 percent tax on wages received by “qualified employees.” This exemption applies to wages paid after the date of enactment through the end of 2010. The maximum value for each qualified employee is $6,621.
Example: If a qualified employee is hired in March and receives $50,000 in wages in 2010, the employer saves $3,100 (6.2 percent of $50,000) in Social Security tax.
The new law defines a “qualified employee” as someone who meets all of these criteria:
- Begins work after February 3, 2010 and before January 1, 2011.
- Has not been employed for more than 40 hours during the previous 60 days (ending on the start date).
- Was not hired to replace another employee unless the former employee separated from employment voluntarily or for cause.
- Is not related to the employer and does not own more than 50 percent of the business, either directly or indirectly.
Notes: A qualified employee may be either a full-time employee or a part-time employee. There is no minimum requirement for the hours worked. The payroll tax forgiveness does not apply to the 1.45 percent Medicare portion of payroll tax.
The exemption officially begins with wages paid in the second calendar quarter of 2010. Employers entitled to tax relief for the first quarter will be credited against their general Social Security liability for the second quarter.
Another tax credit bonus: In addition to the payroll tax forgiveness, an employer can claim a tax credit if it retains a qualified worker for a minimum of 52 consecutive weeks. The credit is equal to the lesser of: $1,000 or 6.2 percent of the employee’s wages paid during the 52-week period. If the employee quits or is fired before the end of the one-year period, no credit is allowed.
The new law requires that employers get statements 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 period. The IRS is currently developing a form employees can use to make the required statement.
HireVeterans.com and CCG have partnered to provide employers with a customized form that the employer will be able to use to claim this lucrative goverment program. Clearly, the sooner you create the job, the higher the financial benefit rewarded by the government.
- To get all the information, please Fill Out the Information Request Form
- Visit HireVeterans.com, job board
H.R.2847 – Hiring Incentives to Restore Employment Act Signed by President Obama
President Barack Obama on Thursday March 18 signed into law the $17.5 billion Hiring Incentive to Restore Employment Act (the “HIRE Act”), comprising a payroll tax holiday for businesses that hire unemployed workers, an income tax credit of $1,000 for businesses that retain these employees and an extension of highways project financing. The bill was passed in the Senate last month and the House earlier in March, with voting largely along partisan lines.
Speaking at the Rose Garden in the White House before signing the bill, Mr. Obama struck a cautious note saying, “I’m signing it mindful that, as I’ve said before, the solution to our economic problems will not come from government alone. Government can’t create all the jobs we need nor can it repair all the damage that’s been done by this recession.”
In a clear indication that jobs may dominate the administration’s agenda in 2010, Mr Obama said, “There’s a lot more that we’re going to need to do to spur hiring in the private sector and bring about full economic recovery.” However, he said, the government could promote a strong, dynamic private sector as the “true engine of job creation,” and nurture the conditions that allow companies to grow and start hiring again.
Unemployment levels in the U.S. stabilised last month at 9.7%. While the economy has technically emerged out of recession, over 8 million Americans lost their jobs through the global economic downturn and new hiring is sluggish.
Apart from its strong focus on hiring in businesses, particularly small and medium sized businesses, the HIRE Act stands out for its focus on job creation through infrastructure project financing support. Touching upon this aspect of the bill Mr. Obama said it reforms the framework of municipal bonds to encourage job creation by expanding investment in schools and clean energy projects.
“Say a town wants to put people to work rebuilding a crumbling elementary school or putting up wind turbines. With this law, we’ll make it easier for them to raise the money they need, to do what they want to do by using a model that we’ve called Build America Bonds — one of the most successful programs in the Recovery Act,” Mr. Obama explained.
Commending a minority of Republicans in Congress who supported the bill Mr. Obama said, “The jobs bill I’m signing today — and our broader efforts to achieve a recovery — aren’t about politics. They’re not about Democrat versus Republican. This isn’t a game that we’re playing here. They’re about the people in this country who are out of work and looking for a job.”
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