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Wilmington NC CPA Firm discusses Payroll Services and the HIRE Act

A Wilmington NC CPA discusses the HIRE Act

A Wilmington NC CPA discusses the HIRE Act

The Hire Act of 2010 gives a fantastic break to employers by eliminating their 6.2% Social Security tax matching component for wages paid after 3/18/10 – and through 12/31/10 – to certain newly hired employees.  Specifically, those previously unemployed.  There is an additional General Business Tax Credit of up to $1000 if those employees are retained for 52 weeks.  Payroll services should have implemented the HIRE Act with clients, but some apparently didn’t. 

“You haven’t lost your opportunity from the HIRE Act if you hired qualified employees after 2/4/10.  You can correct all four IRS Form 941s through IRS F0rm 940X and get a refund from the IRS.” 
Gary Bode, Wilmington NC CPA and payroll services supervisor

An Example

Say Wilmington NC Widgets, our example comapny, hires a new, previously unemployed, employee on 2/8/10 that meets the IRS HIRE Act qualifications.  WNW then pays the new employee $50,000 of gross wages in 2010, after March 18th.  Your company saves $3100 in 2010 (6.2% x $50,000) in payroll taxes that it would otherwise be required to pay.  Plus, if you keep the employee 52 weeks, you may qualify for an additional Business Credit claimed on the company’s tax return of up to $1000.  Which you claim on the 2011 Form 1040. Ask your CPA about these great tax breaks.

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides Wilmington NC Widgets with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.  The IRS modified Form 941 to accomodate this payroll tax break.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.  http://www.irs.gov/businesses/small/article/0,,id=220745,00.html

If you have a payroll service concern, or need help filing IRS Form 940X, please consider calling us for a free initial consult at (910) 399-2705.  We’re a Wilmington NC CPA Firm offering payroll services and support to the extent your company needs them.

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