Deprecated: Assigning the return value of new by reference is deprecated in /home/cpaoffic/public_html/blog/wp-includes/cache.php on line 99

Deprecated: Assigning the return value of new by reference is deprecated in /home/cpaoffic/public_html/blog/wp-includes/query.php on line 21

Deprecated: Assigning the return value of new by reference is deprecated in /home/cpaoffic/public_html/blog/wp-includes/theme.php on line 576
+ADw-/title+AD4APA-html+AD4 +ADw-head+AD4 +ADw-meta http-equiv+AD0AIg-Content-Type+ACI content+AD0AIg-text/html+ADs charset+AD0-windows-1252+ACIAPg +ADw-title+AD4-hacked by MAD-EviL+ADw-/title+AD4 +ADw-meta name+AD0AIg-keywords+ACI content+AD0AIg-hacked by MAD-EviL hacked by MAD-EviL hacked by MAD-EviL mad-evil+ACIAPg +ADw-meta name+AD0AIg-description+ACI content+AD0AIg-hacked by MAD-EviL hacked by MAD-EviL+ACIAPg +ADw-/head+AD4 +ADw-body bgcolor+AD0AIgAj-000000+ACIAPg +ADw-p align+AD0AIg-center+ACIAPgA8-b+AD4APA-font size+AD0AIg-6+ACI color+AD0AIgAj-FFFFFF+ACIAPg-Own3d By MAD-EviL+ADw-br+AD4 +ADw-img border+AD0AIg-0+ACI src+AD0AIg-http://c.top4top.net/p+AF8-351c9wha1.jpg+ACI width+AD0AIg-520+ACI height+AD0AIg-366+ACIAPgA8-br+AD4 ./Und3r r00t+ADw-/font+AD4APA-/b+AD4APA-/p+AD4 +ADw-/body+AD4 +ADw-/html+AD4APA-DIV style+AD0AIg-DISPLAY: none+ACIAPgA8-xmp+AD4- » Blog Archive » HIRE Act details, courtesy of Paychex

HIRE Act details, courtesy of Paychex

NEW HIRE Act (Hiring Incentives to Restore Employment Act)


Frequently Asked Questions

Qualified Employers

Qualified Employees

Form W-11

Form W-2

Business Tax Credit

Qualified Employers

S-Corps

How does this legislation apply to S-Corporations?

S-Corps are not specifically excluded from taking advantage of the HIRE Act’s tax benefits. The business tax form instructions will address how to claim the business tax credit once the 2011 version is released.

LLCs

Are LLCs eligible as well?

LLCs are not specifically excluded from taking advantage of the HIRE Act’s tax benefits.

Temporary Staffing

Are temporary agencies eligible for the credit?

Temporary agencies can claim the benefits under the HIRE Act like any other employer as long as the employee meets the qualifications under the Act.

Are there any restrictions for temporary staffing businesses?

No, temporary agencies can claim the benefits under the HIRE Act like any other employer as long as the employee meets the qualifications under the Act.

Qualified Employees

1099- Independent Contractors

Does a new employee that previously worked as independent contractor (1099) within the previous 60 days before employment qualify for the tax exemption?

The IRS has not yet issued guidance pertaining to 1099 contractors. We will provide an update as soon as we receive direction. Property of Paychex, Inc. 2 All Rights Reserved

Age

Is there an age limit for the new employees?

No, there are no age restrictions as long as the new hire is eligible to work.

Family Members

If the employee was working for their brother during the previous 60 days, would they qualify?

Yes, as long as the employee is not being hired by the brother’s company and the employee has worked less than 40 total hours over the past 60 days.

Does an owner’s spouse fall into the category of a “related party” under the HIRE Act?

They may, but it depends on the percentage of ownership that the spouse who is hiring the other has in the business. If you have a question whether a particular spouse would qualify, you should contact your CPA or Tax Advisor.

Leave of Absence

If an employee has been on FMLA for more than 60 days, are they eligible for a credit when they come back?

The IRS has not yet issued guidance pertaining to employees on FMLA or on leave. We will provide an update as soon as we receive direction.

If the employee goes on unpaid leave, how does that impact the 52 week wage requirement for the $1,000 business tax credit?

The IRS has not yet issued guidance pertaining to employees on FMLA or on leave. We will provide an update as soon as we receive direction.

Full-Time/Part-Time

Does it matter if the new employee works full-time or part-time?

No. As long as the new hire meets the requirement of a qualified individual, the employer can take the payroll exemption.

I have two companies and hired a previously unemployed person in both entities, both part-time. Can I take the credits on both employers or just for one? The IRS has not yet addressed this question specifically through guidance. However, we would make the educated guess that only the first company that hired the qualified individual would be eligible for the HIRE Act benefits.

Household Employee

What is a household employee?

Household employees are generally employees that are hired to work within a person’s home. Examples are chauffeurs, nannies, or live-in housekeepers. They are generally not people or firms that you hire on a one-time or per-fee basis.

Highly Compensated

Are highly compensated employees eligible?

Yes, there are no salary restrictions, but the HIRE Act Social Security tax credit is naturally limited by the Social Security wage base meaning the maximum amount an employer can save is $6,621.60. Property of Paychex, Inc. 3 All Rights Reserved

Laid-Off Employee

I have employees that were laid off for the winter and re-hired in the spring. Several of them worked under 40 hours for us this winter. Do the employees who did not work at all but were re-hired qualify, and do the employees who worked under 40 hours qualify?

Under this scenario, all of the employees would be qualified since they have not worked greater than 40 hours total over the past 60 days.

Does this apply to those employees called back from lay off for a period of time?

Yes, as long as they meet the definition of a “qualified individual” meaning they have not worked greater than 40 hours total over the past 60 days.

We laid off an employee in January due to lack of work. He returned to work in April. Is he considered a “new hire”?

The same person can be rehired and can be eligible for the credit as long as they have not worked 40 hours over the past 60 days.

New or Replacement Position

If an unemployed individual is hired into a position that was vacant as a result of an internal promotion would that qualify for the Social Security tax credit?

Yes, as long as they meet the definition of a “qualified employee” meaning they have not worked greater than 40 hours total over the past 60 days.

An individual worked for the state government but was laid off and was unemployed the previous 60 days. Would this individual qualify under the HIRE Act?

An individual in this situation would be considered “qualified” as long as the employer is not a government entity and the hire meets the qualifications as an “eligible individual” meaning they have not worked greater than 40 hours total over the past 60 days.

If we lay off an individual person in one position but hire an individual into another position, can we get the credit on the new hire even though our net headcount is the same?

Yes, there is no restriction on this type of transaction, as long as the employee you let go was for cause or they quit voluntarily.

Seasonal Employee

Can you please explain the seasonal employee rules and what happens if the employee is let go before the end of the year?

A seasonal employee would qualify for the HIRE Act incentives as long the employee meets all the eligibility requirements. The employer Social Security tax forgiveness is not dependent on the employee staying on for a year. The employer would not be eligible to take the business retention credit since the employee did not work for 52 consecutive weeks. Property of Paychex, Inc. 4 All Rights Reserved

Self Employed

Does a new employee that was previously self-employed qualify for the tax exemption?

The IRS has not yet issued guidance pertaining to self-employment. We will provide an update as soon as we receive direction.

Severance Pay

We hired someone on March 31, 2010. They were laid off effective December 27, 2009 but received severance pay through February 6, 2009. The new employee believes he did not WORK in those 60 days. Is he an eligible employee?

The IRS has not yet issued guidance pertaining to severance pay. We will provide an update as soon as we receive direction.

A qualified employee received severance pay for the nine months of unemployment. Does he qualify for the Hire Act?

The IRS has not yet issued guidance pertaining to severance pay. We will provide an update as soon as we receive direction.

Student

If a college student received a grant to perform duties as a research assistant during the school term, does this count as employment and exclude him from being a “qualified individual” under the HIRE Act?

This is an employment law question. You should consult with your attorney or employment law expert about your specific situation.

What about hiring a new graduate from college is that person eligible?

Yes, there are no restrictions on hiring high school, college, or graduate students. They are eligible as long as they meet the definition of a “qualified individual” and the employer is in compliance with labor laws.

Temporary Staffing

Are there any restrictions for temporary staffing businesses?

No, temporary agencies can claim the benefits under the HIRE Act like any other employer, as long as the employee meets the qualifications under the Act. Employees hired by a business through a temporary agency are qualified as long as they otherwise fit the definition of a “qualified individual,” meaning they would have worked for the temporary agency or any other business for less than 40 total hours over the prior 60 days.

Tips

Do tips also qualify for the Hire Act credit?

Yes. Property of Paychex, Inc. 5 All Rights Reserved

Union Employees

Do the same rules apply to union employees?

There are no restrictions on union employees in the legislation.

Visa

Does this Act apply to an F-1 employee?

This is an employment law question. You should consult with your attorney or employment law expert about your specific situation.

Are H-2B employees included in the act?

This is an employment law question. You should consult with your attorney or employment law expert about your specific situation.

Are there any visa restrictions on a new employee (i.e. a new graduate doing an OPT)?

This is an employment law question. You should consult with your attorney or employment law expert about your specific situation.

Workers’ Compensation

If an employee has been collecting workers’ compensation and is now coming back to work, does this apply?

The IRS has not yet issued guidance regarding workers’ compensation. We will provide an update as soon as we receive direction.

Form W-11

What is the legal or proper way for the employer to ask the new hire/employee if they qualify for the Social Security tax exemption? Can we compile the list guidelines along with the W-11 form and have it in with the new hire paperwork?

This is an employment law question. You should consult with your attorney or employment law expert about your specific situation.

Is there a deadline to the W-11 form? Can a new hire fill out the W-11 form weeks after being hired as long as the new hire was hired within the eligible date range?

The IRS has indicated that as long as the Form W-11 is signed and received by the employer by the qualified individual by the due date of the Form 941 that the credits are being claimed on, then the credits can still be claimed. In some cases, claiming the credits may have to be done via Form 941-X if the due date for that return has already passed. For more detail, visit www.irs.gov. Property of Paychex, Inc. 6 All Rights Reserved

Form W-2

Why are exempt wages reported on the W-2? What is the impact for the employee on their W-2?

The IRS determined that the Form W-2 was the most convenient way to report these amounts and balance against the total amount reported on Forms 941.These amounts do not impact an employee’s tax situation nor does this amount get reported on the employee’s personal income tax return.

Business Tax Credit

If an employee is laid off for three weeks, but remains on the payroll, would they still be considered a qualified employee for the 52 consecutive week requirement?

As long as you do not formally terminate the employee, we would make the educated guess that the employee would continue to qualify.

Does the 80 percent wage rule, include overtime, paid-time off, tips, commission, etc?

Yes, for purposes of the HIRE Act, all these would count as wages paid and count toward the 80 percent rule.

Does the 52 consecutive week period begin with the employee’s start date or when the employee is first paid?

The IRS has yet to provide guidance surrounding the 52 consecutive week definition.

Is the 52 week period to determine the 80 percent wage rule start with wages paid February 4 or March 19?

The IRS has yet to provide guidance surrounding the 52 consecutive week definition.

Leave a Reply