Vision Payroll

Due to the severe storms, flooding, mudslides and landslides in New Jersey beginning March 12, 2010, President Barack Obama declared the following counties a federal disaster area: Atlantic, Bergen, Burlington, Cape May, Cumberland, Essex, Gloucester, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, and Union. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after March 11, 2010 and before March 30, 2010 as long as the deposits were made by March 29, 2010. In addition, affected taxpayers will have until May 11, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding, mudslides and landslides and need further information on the relief provided by the IRS.

This week’s question comes from Franz, a small-business owner. We provide health insurance for our employees. We heard that we can get a credit on our tax return this year. What is the Small Business Health Care Tax Credit? Answer: the Small Business Health Care Tax Credit takes effect in 2010 and is available to many small businesses and tax-exempt employers. To determine if your business or tax-exempt organization qualifies, follow these steps:

1. Determine the number of employees who work at least forty hours per week, but don’t count owners or family members. These employees are considered full-time employees.
2. Determine the number of full-time equivalent employees by dividing the total number of hours worked by employees who work less than forty hours per week by 2080. Again, do not count owners or family members.
3. Calculate the sum of the numbers calculated in steps 1 and 2. If the sum is less than twenty-five, continue to step 4. If the sum is twenty-five or more, stop. Your business does not qualify for the credit.
4. Divide the total annual wages paid to the employees counted in steps 1 and 2 by the sum calculated in step 3. If the quotient is less than $50,000, continue to step 5. If the quotient is $50,000 or more, stop. Your business does not qualify for the credit.
5. Determine if your business pays at least half of the insurance premiums for your employees at the single (employee-only) coverage rate. If you do, your business may qualify for the credit. If you don’t, stop. Your business does not qualify for the credit.

Over the next several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. These details will help employers more accurately determine qualifying employers and average annual wages and also calculate and claim the credit.

According to the US Department of Labor, in the week ending April 3, the advance figure for seasonally adjusted initial claims was 460,000, an increase of 18,000 from the previous week’s revised figure of 442,000. The 4-week moving average was 450,250, an increase of 2,250 from the previous week’s revised average of 448,000.

The advance seasonally adjusted insured unemployment rate was 3.5% for the week ending March 27, a decrease of 0.1 percentage points from the prior week’s unrevised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending March 27 was 4,550,000, a decrease of 131,000 from the preceding week’s revised level of 4,681,000. The 4-week moving average was 4,648,250, a decrease of 36,000 from the preceding week’s revised average of 4,684,250.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.236 million.

The Internal Revenue Service (IRS) has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Employers can use Form W-11 to confirm that an employee is a qualified employee under the HIRE Act. Alternatively, they can use another similar statement if it contains the same information and the employee signs it under penalties of perjury.

Only employees who meet all the requirements of a qualified employee may complete this affidavit or similar statement. You cannot claim the HIRE Act benefits, including the payroll tax exemption or the new hire retention credit, unless the employee completes and signs this affidavit or similar statement under penalties of perjury and is otherwise a qualified employee.

A “qualified employee” is an employee who:

• Begins employment with you after February 3, 2010, and before January 1, 2011;
• Certifies by signed affidavit, or similar statement under penalties of perjury, that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employee begins employment with you;
• Is not employed by you to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing); and
• Is not related to you. An employee is related to you if he or she is your child or a descendent of your child, your sibling or stepsibling, your parent or an ancestor of your parent, your stepparent, your niece or nephew, your aunt or uncle, or your in-law. An employee also is related to you if he or she is related to anyone who owns more than 50% of your outstanding stock or capital and profits interest or is your dependent or a dependent of anyone who owns more than 50% of your outstanding stock or capital and profits interest.

Contact Vision Payroll if you have further questions on the HIRE Act. If you prefer, you can attend one of our upcoming seminars that will cover what you need to know about the HIRE Act.

Due to the severe storms, flooding, mudslides and landslides in West Virginia beginning March 12, 2010, President Barack Obama declared the following counties a federal disaster area: Fayette, Greenbrier, Kanawha, Mercer and Raleigh. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after March 11, 2010 and before March 30, 2010 as long as the deposits were made by March 29, 2010. In addition, affected taxpayers will have until May 11, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms, flooding, mudslides and landslides and need further information on the relief provided by the IRS.

Due to the severe storms and flooding in Massachusetts beginning March 12, 2010, President Barack Obama declared the following counties a federal disaster area: Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk and Worcester. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after March 11, 2010 and before March 30, 2010 as long as the deposits were made by March 29, 2010. In addition, affected taxpayers will have until May 11, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms and flooding and need further information on the relief provided by the IRS.

Due to the severe storms and flooding in Rhode Island beginning March 12, 2010, President Barack Obama declared the following counties a federal disaster area: Bristol, Kent, Newport, Providence and Washington. Therefore, the Internal Revenue Service (IRS) announced recently that it will waive failure to deposit penalties for employment and excise taxes due after March 11, 2010 and before March 30, 2010 as long as the deposits were made by March 29, 2010. In addition, affected taxpayers will have until May 11, 2010 to file most tax returns. Contact Vision Payroll if you were affected by the severe storms and flooding and need further information on the relief provided by the IRS.

Nonfarm payroll employment increased by 162,000 in March, and the unemployment rate held at 9.7%, the US Bureau of Labor Statistics reported recently. Temporary help services and health care continued to add jobs over the month. Employment in federal government also rose, reflecting the hiring of temporary workers for Census 2010. Employment continued to decline in financial activities and in information.

In March, the number of unemployed persons was little changed at 15.0 million, and the unemployment rate remained at 9.7%.

Among the major worker groups, the unemployment rates for adult men (10.0%), adult women (8.0%), teenagers (26.1%), whites (8.8%), blacks (16.5%), and Hispanics (12.6%) showed little or no change in March. The jobless rate for Asians was 7.5%, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over) increased by 414,000 over the month to 6.5 million. In March, 44.1% of unemployed persons were jobless for 27 weeks or more.

The civilian labor force participation rate (64.9%) and the employment-population ratio (58.6%) continued to edge up in March.

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased to 9.1 million in March. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

About 2.3 million persons were marginally attached to the labor force in March, compared with 2.1 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 1.0 million discouraged workers in March, up by 309,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.

This week’s question comes from Andrew, a company president. We know that we can receive a payroll tax exemption and income tax credit under the HIRE Act if we hire certain unemployed workers. We need qualified employees to sign an affidavit to prove they are eligible. When will the HIRE Act affidavit form be available? Answer: The Internal Revenue Service (IRS) has released a draft Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Under the HIRE Act, employers may avoid paying social security tax on qualified employees and receive an income tax credit for retaining those employees. Employers are required to obtain a signed affidavit from qualified employees. A final Form W-11 is expected to be released by the IRS during the week of April 4, 2010. Contact Vision Payroll with further questions on the HIRE Act.

According to the US Department of Labor, in the week ending March 27, the advance figure for seasonally adjusted initial claims was 439,000, a decrease of 6,000 from the previous week’s revised figure of 445,000. The 4-week moving average was 447,250, a decrease of 6,750 from the previous week’s revised average of 454,000.

The advance seasonally adjusted insured unemployment rate was 3.6% for the week ending March 20, unchanged from the prior week’s unrevised rate of 3.6%.

The advance number for seasonally adjusted insured unemployment during the week ending March 20 was 4,662,000, a decrease of 6,000 from the preceding week’s revised level of 4,668,000. The 4-week moving average was 4,679,500, a decrease of 12,500 from the preceding week’s revised average of 4,692,000.

The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.259 million. The increase in this number is attributable to the implementation of new seasonal factors.