On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (known as the HIRE Act) into law. How Can The New Hire Act Benefit Your Dental Practice?
The Key Provisions of the Act
What Constitutes a Qualified Employee?
All new qualified employees must complete and sign IRS Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Affidavit. This signed affidavit is not sent to the IRS but MUST be maintained by the practice. We suggest keeping this affidavit in the employee's payroll file. If you would like a copy of the W-11 form, send an email to firstname.lastname@example.org with "Form W-11" in the subject line.
How is the Payroll Tax Exemption Reported?
The 6.2% payroll tax exemption for qualified employees is claimed on the payroll tax form 941 starting with the second quarter of 2010. Please note that the employer is still obligated to withhold and pay the employee portion of social security tax. This exemption does not apply to Medicare tax on wages. If you utilize a payroll service, please make sure you provide them with the information regarding qualified employees so that it can be accurately reported. For a copy of the new 941 form or instructions, please email email@example.com "Form 941" in the subject line. In addition, at year end this information must be indicated on Form W-2 and W-3.
How is the Retention Credit for Qualified Individuals Claimed?
This credit was enacted to promote the retention of Qualified Individuals that re employed for 52 consecutive weeks in your practice. The credit will be claimed on your 2011 income tax return. The credit is limited to the lesser of $1,000 or 6.2% of the qualified employee's wages. The credit may be claimed for each qualified employee.
How The New Hire Act Can Save Your Practice Money
Please note that this article is a brief synopsis of the HIRE Act. An employer cannot apply the payroll tax credit and the Work Opportunity Tax Credit (WOTC) for a qualified employee. For more information or specific details about the HIRE Act, please consult your CPA or visit www.irs.gov.
This article appeared in the August 2010 issue of Insurance Solutions Newsletter.