Form W-11 - Hiring Incentives To Restore Employment (Hire) Act Employee Affidavit Page 2
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3Business Credit for Retention of Certain Newly Hired Individuals. Under the HIRE
Act, an employer's general business credit is increased by the lesser of $1,000 or 6.2
percent of salary for each retained worker that satisfies a minimum employment period.
Generally, a retained worker is an individual who is a qualified individual as defined for
purposes of the provision for payroll tax forgiveness. However, the credit is available
only with respect to such individual, if the individual:
1. is employed by the employer on any date during the tax year;
2. continues to be employed by the employer for a period of not less than 52
consecutive weeks; and
3. receives wages for such employment during the last 26 weeks of such period
that are at least 80-percent of such wages during the first 26 weeks of such
period.
Therefore, an employer will qualify for the full $1,000 credit for each new hire with a
salary over the 52 retention period of at least $16,129. An employer that hires some
part-time new employees, in addition to full-time employees, is entitled to the full $1,000
credit, if, of course, the part-time or full-time employee decides to stay for 52 weeks.
Because payroll taxes are deductible as an ordinary and necessary business expense,
employers may have a correspondingly smaller business expense deduction on their
2010 tax returns. By combining the benefit of the business credit for new hires with the
forgiveness incentive, employers in the highest brackets will realize a net tax benefit of
just over four percent of wages paid to qualified new employees, up to the $106,800
social security maximum wage base. Therefore, for the maximum $6,621.60 tax
forgiveness for a new hire, a net benefit of approximately $4,304 would be realized.
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