Employer Match for New Employees SS Waived and a $1,000 Credit

published May, 2010

According to the new HIRE legislation, if you hire unemployed workers onto your payroll after Feb 3, 2010 and before Jan 1, 2011, you may qualify to NOT PAY the employer match of 6.2% of Social Security taxes. The employee sill needs to have their 6.2% withheld. You’ll still owe the Medicare match of 1.45% and the employee still needs to have their 1.45% withheld.

For each worker you keep on payroll for at least a year, your business may also claim a tax credit up to $1,000 per worker on your 2011 tax return.

This is NEW, and there are some restrictions on it. You can’t fire someone and replace them with a ‘qualified’ worker and get the credit, but if someone leaves voluntarily and is replaced by a ‘qualified’ worker, it is OK.

Qualified Workers have to have been previously unemployed for 60 days before beginning work, or worked fewer than 40 hours for someone else during the 60 day period. Did I mention this is NEW? The IRS is still developing a form to collect the required 60 day statement from the employee.

The credit will be reported/claimed on the second quarter Form 941.

I’ll send details as they become available—they’re still working this out.