Vision Payroll

The recently passed HIRE Act allows employers to save $2,500 in payroll taxes for new hires earning $33,000 and provides even greater savings for hiring more highly paid employees. The Health Care Reform bill added an income tax credit for employers who pay for a portion of their employees’ health insurance.

Don’t miss these significant tax savings. Vision Payroll is presenting a free one-hour seminar this Thursday, April 22 so qualifying employers can learn how to take advantage of these recent law changes. Click here for more information and to register online.

This week’s question comes from Dan, a small-business owner. I have several employees that I hired who have signed Form W-11. What information do I need to provide to Vision Payroll to qualify for the HIRE Act Credit? Answer: 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. The Internal Revenue Service (IRS) has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit that employers must have signed by eligible employees to claim the credit. Once an employer has obtained a signed form from an employee, contact Vision Payroll to inform us that the employee is eligible for the credit. Vision Payroll will work with employers to determine the eligible wages already paid in 2010 and ensure that future wages are not taxed. Contact Vision Payroll if you have further questions on the HIRE Act Credit.

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.

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.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. Additionally, the wages must be “for services performed…in a trade or business of such qualified employer” or for exempt employers, “in furtherance of the activities related to the purpose or function constituting the basis of the employer’s exemption under section 501.” Contact Vision Payroll if you have further questions on the HIRE Act.

This week’s question comes from Sean, an HR director. We are in the process of hiring some employees who would allow us to claim exemption from paying the employer’s share of social security taxes because of the HIRE Act. Some employees are hesitant due to the impact on their future social security benefits. How does the HIRE Act affect employees’ future social security benefits? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Although employers may be exempt from paying the taxes, there is no impact on any employee’s future social security benefits. Contact Vision Payroll if you have further questions on the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Employers who claim the exemption under the HIRE Act may not claim the Work Opportunity Tax Credit with respect to wages paid for which the HIRE Act exemption is claimed. The Internal Revenue Service (IRS) is authorized under the HIRE Act to prescribe the manner for making an election to have this section of the HIRE Act not apply. Employers who would receive greater benefit under the Work Opportunity Tax Credit should consider making the election. Vision Payroll strongly recommends that employers consult their income tax advisor before claiming the exemption or electing not to claim the exemption under the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Exempt wages are those paid “with respect to employment during the period beginning [March 19, 2010] and ending on December 31, 2010.” The “with respect to employment” phrase seems to indicate that employers will be able to claim exemption for wages paid at any time as long as the employment period for which the wages were earned is before January 1, 2011. Therefore, wages paid during 2011 may also qualify if paid “with respect to employment” during 2010. Contact Vision Payroll if you have further questions on the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Most employers are eligible for this exemption. According to the HIRE Act, a “qualified employer” is any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing, although “a public institution of higher education (as defined in section 101(b) of the Higher Education Act of 1965)” also is a qualified employer, even if a public institution. Contact Vision Payroll if you have further questions on the HIRE Act.

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Employees are not eligible under the HIRE Act if the employee is “employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause.” Therefore, employers may not simply terminate employees and replace them with otherwise qualified individuals and qualify for the exemption. Contact Vision Payroll if you have further questions on the HIRE Act.