| On March 18, 2010 Washington passed a new law | | | | qualified employee under the HIRE |
| the HIRE Act (Hiring Incentives to Restore | | | | Act. |
| Employment). The enactment of the HIRE Act | | | | |
| allows employers to claim two tax benefits. The | | | | To claim the Hire Act payroll exemption |
| tax benefits apply to workers hired after Feb. 3, | | | | employers will use 2010 Form 941. The IRS has |
| 2010 but before Jan. 1, 2011 and/ or for each | | | | updated the 2nd quarter 2010 Form 941 to |
| worker employed for at least a year. | | | | reflect the Hire Act. Form 941 for 2010 includes |
| | | | | boxes 6a, 6b, 6c, 12c and 12d for tax exemption |
| The first payroll tax exemption involves the | | | | entries. Box 6a is used for the number of qualified |
| employer's 6.2% share of Social Security tax. If | | | | employees first paid exempt wages/ tips this |
| the employer has a qualified employee the | | | | quarter, Box 6b the number of qualified |
| employer will be exempt from their 6.2% Social | | | | employees paid exempt wages/tips this quarter |
| Security tax through December 31, 2010. The | | | | and Box 6c exempt wages/tips paid to qualified |
| benefit is allowed for wages paid March 19, 2010 | | | | employees this quarter. The exemption for the |
| (the day after the bill was passed) through | | | | 1st quarter of 2010 will be claimed on the second |
| December 31, 2010.The new law does not apply | | | | quarter Form 941 as a credit. The amount of the |
| to the employee's share of Social Security and | | | | credit will be refunded to the employer or applied |
| Medicare or the employer portion of the Medicare | | | | towards a liability in a following quarter.The boxes |
| withholding. The exemption does not reduce the | | | | added under Cobra premium assistance payments |
| employee's Social Security benefits. | | | | are used to claim the exemption for qualified |
| | | | | wages/ tips paid in the 1st quarter of the year |
| The second payroll tax break (hire retention | | | | (March 19th- March 31st). Box 12c is used to |
| credit) applies in the case of the newly hired | | | | enter the number of qualified employees paid |
| worker that retained for at least a year. | | | | exempt wages/tips March 19–31, box 12d is |
| Businesses may claim an additional general | | | | used to report exempt wages/tips paid to |
| business tax credit, up to $1,000 per worker, | | | | qualified employees on March 19–31 and box |
| when they file their 2011 income tax returns. The | | | | 12e will be used to report the Social security tax |
| employee's compensation must not significantly | | | | exemption for March19–31. |
| decrease the second six months of employment | | | | The Hire Act bill could be important to small |
| to qualify for the hire retention credit. | | | | business owners looking to expand their company |
| | | | | and payroll. Small business payroll software can |
| Employees must certify by a signed affidavit, | | | | help assure you do not pass up any money you |
| under penalties of perjury, that they have not | | | | have coming to you. A beneficial payroll solution to |
| been employed for more than 40 hours during | | | | ease the process of claiming exemptions and |
| the 60-day period ending on the date they | | | | inputting Form 941 data is small business payroll |
| started employment. The IRS has issued Form | | | | software that tracks qualified employees and |
| W-11 Hiring Incentives to Restore Employment | | | | automatically populates 2010 Form 941 data to |
| (HIRE) Act Employee Affidavit to be used by | | | | easily print and file with the IRS. |
| employers to confirm that an employee is a | | | | |