payroll
Payroll tax credit
Wednesday, July 7th, 2010 | tax | No Comments
It is time to prepare your second quarter payroll tax returns, due August 2, 2010 (July 31 falls on Saturday). If your company or tax-exempt organization has hired employees this year, you may be eligible for the HIRE Act new hire tax credit. You should check before filing Form 941. We previously posted about this and other tax credits in the spring.
Here is a checklist (but consult your tax adviser for specifics related to your situation):
- Was the new worker hired to fill a new position, or to replace someone who quit voluntarily or who was terminated for cause? The new worker may not be related to you or to another owner of the business.
- Was he/she hired after February 3, 2010, and before January 1, 2011?
- Did he/she work less than 40 hours during the 60 days ending on the hire date?
- Did he/she sign and give you the required Form W-11 certifying these facts? (Do not send this form to the IRS.)
If all of the above conditions are met, you qualify for an exemption of 6.2% (the employer share of Social Security tax) of wages paid between March 19 and December 31, 2010. This reduces the amount of your tax deposits for this year. It does not affect amounts withheld from the employee’s pay.
Form 941 has been modified to report wages to qualified employees starting with the second quarter. The IRS has provided more information in the instructions to the forms, and in a question-and-answer format at their website.
Small Business Tax Incentives
Wednesday, June 2nd, 2010 | tax | No Comments
Recent legislation provides incentives for businesses to hire unemployed workers and provide health insurance.
If your company hires a worker after February 3, 2010 through year-end, the HIRE Act allows a credit equivalent to the employer’s share of Social Security tax (6.2%). If the employee stays with you for a year, your company gets a $1,000 tax credit. The new hire must not have worked more than forty hours in the prior sixty days, and generally must be hired into a new position. There are important details and procedures, and a new Form W-11 for the new worker to fill out.
Some provisions of the Affordable Care Act (healthcare reform) take effect this year. The small business health care credit is generally available to small employers that pay at least half the cost of single coverage for their employees in 2010. There are complicated rules regarding such definitions as full-time equivalents and compensation-based phase-out ranges. But if you offer health insurance coverage to your employees, the tax savings could be significant. For more information, read the IRS release. Then find out what you need to do to qualify for the credits.