Hiring Incentives to Restore Employment (HIRE) Act
If you are an employer who qualifies for the payroll tax forgiveness under the new HIRE act, you will see the tax benefit in the 2nd quarter Federal payroll tax return.
Payroll Tax Forgiveness for Hiring Unemployed Workers
The 6.2% employer's share of Social Security Tax does not apply to wages paid to qualified employees during the period of time beginning on 3/19/2010 and ending 12/31/2010.
Qualified Employee
Qualified employees are individuals who begin employment with you after 02/03/2010 and before 12/31/2010, who have been unemployed or employed for 40 hours or less during the 60-day period prior to this employment. This means a recent graduate who has been in school also qualifies.
Any individual who is related to the employer does not qualify (e.g. family member). Any individual who is related to anyone who owns more than 50% of your company ownership also does not qualify.
Qualified employees must certify a signed affidavit that they have not been employed for than 40 hours during the 60-day period ending on the date they started employment. If you need an affidavit form, visit www.irs.gov and download Form W-11. The affidavit form need not to be submitted to the IRS, but the employer must keep for own records.
How to Report the qualified wages in the 2nd Quarter Fedearl Payroll Return (Form 941)
The IRS Form 941 has been revised for this tax incentive. You should report the current quarter qualified employees and wages information in lines 6a through 6c.
Since the IRS Form 941 was not yet revised for the time of filing of the 1st quarter Federal Payroll Tax Return, you can claim the tax incentive belongs to the 1st quarter in the 2nd quarter return instead. The the number of qualified employees and qualified wages you paid between 03/19/2010 and 03/31/2010 shoul be reported in lines 12c and 12d.
