Your Small Business Can Benefit From HIRE Act

Monday, October 4, 2010, AM | Leave Comment

IRS website states that “Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed qualified employees.”

For small business that might be thinking whether to hire new employees or not, the HIRE Act gives certain incentives – two of them – to the small business owner.

  1. Hire Now Tax Cuts…

    This combines payroll forgiveness for Social Security taxes paid by employers on qualified new hires with a tax credit – not a deduction – for keeping new hires on the payroll for at least 52 consecutive weeks. In essence, this is an exemption from Social Security payroll taxes for every worker hired between February 3, 2010 and December 31, 2010. Both dates are inclusive. The new hire must be unemployed for at least 60 days.

  2. Additional $1,000 income tax credit…

    The HIRE Act also provides an additional $1,000 income tax credit for every new employee retained for 52 consecutive weeks. Because this is a 52-week-period clause, therefore the credit will be taken on an employer’s 2011 income tax return.

The HIRE Act also extended 2008 and 2009 expense thresholds…

With this clause, small businesses can continue to write off up to $250,000 of certain capital expenditures but will be subjected to a phase cut once expenditures exceed $800,000 in 2010. Talk to your tax adviser.

In a Nutshell
For more information, click on IRS – HIRE Act: Questions and Answers for Employers.

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