Wednesday, May 5, 2010

New Tax Benefits Available to Aid Employers

Last March Congress passed two watershed reform laws, the Hiring Incentives to Restore Employment (HIRE) Act and the Patient Protection and Affordable Care Act, both of which include considerable tax breaks for employers. These tax benefits might be the perfect remedy for employers looking to expand payroll or looking to save.

The HIRE Act

The HIRE Act includes provisions that will benefit employers who hire previously unemployed or underemployed workers this year. The employers who qualify are eligible for a 6.2% payroll incentive, which effectively exempts them from their share of Social Security taxes on wages paid to the employee. How much exactly could that 6.2% save you? It could be a lot!

Let’s say you hire 3 previously unemployed employees and each are paid $25,000. With the HIRE tax benefit, you can save $4650!

Another tax break included in the HIRE act is an additional general business tax credit, up to $1,000, for each previously unemployed worker retained for at least a year. The tax credit applies when businesses file their 2011 income tax return.

Here is the breakdown on how you might qualify:

· Employers must have hired unemployed workers this year from February 3, 2010 and before January 1, 2011.

· The employer must receive a statement from the new hire that confirms he or she was unemployed for at least 60 days before being hired or have worked less than a total of 40 hours in the previous job.

· New hires who fill existing position may only qualify if the previous workers left voluntarily.

Check out this link http://www.paychex.com/hireact/

from PayChex to see how

much you can save.

The Patient Protection and Affordable Care Act

The new health care law offers a tax credit to small employers that provide health care coverage to their employees. Businesses can claim a maximum credit of 35% of the employer’s premium expenses against their income tax return.

How much can you save from this tax credit? Let’s say you have 10 employees on staff and you pay $300 a month for their health care premium, a total of $36,000 a year. If you qualify for the maximum credit of 35%, you can receive a $12,600 credit!

Here is how you may qualify:

  • Businesses must have fewer than 25 full time employees for the tax year.
  • The wages for the employees must average less than $50,000 per employee.

For more information, give us a call!