Did you hire employees who qualified for last year’s exemption from a portion of social security taxes? Are those employees still working for you? When both answers are yes, you may be eligible for a general business tax credit of up to $1,000.
The “new hire retention credit” is the second part of the federal tax breaks included in the 2010 HIRE Act.
As you may recall, last year you could choose a payroll tax exemption for your business’s portion of social security taxes when you hired certain workers between February 4 and December 31, 2010. Among other requirements, your new employees had to certify they had worked no more than 40 hours in the 60 days prior to being hired.
This year a different tax break is available for those same employees. For 2011, you can claim a one-time credit on your federal income tax return when you meet two other requirements.
- The first requirement is time: The employee must have worked for you at least 52 consecutive weeks.
- The second requirement is money. To determine eligibility, split the 52 consecutive weeks into two 26-week segments. Compare the wages you paid during each time period. To qualify for the credit, wages paid in the second 26-week segment must be 80% or more of the amount paid during the first.
You can claim the new hire retention credit in addition to other business credits, including the work opportunity tax credit. Please call to find out if your business is eligible.
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