The IRS tends to release some great individual tax credits — take the new homeowner’s credit now on it’s third revision. Most often, the new business credits are hard to take full advantage of for small businesses. However, there is a new tax credit out and the IRS has released the necessary forms to apply for the credit. Most impressive is the ability for many small business to take advantage of the credit. Here’s the basics.
If you hire someone after February 3, 2010 that has been unemployed, or essentially unemployed for the 60 days prior to their hire date with you, then you qualify for a credit under the HIRE Act. For these qualifying employees, you will receive a credit of your portion of their FICA tax through 12/31/2010. This is the 6.2% you pay on their gross wages and does not include the medicare portion. To see if you qualify for the credit and to provide the documentation for your payroll provider, use IRS Form W-11 from the IRS web site.
Let’s say you hire someone in April that qualifies and will pay them $25,000 for the remainder of the year. This credit will save you $1,550 or 6.2% of $25,000. Not only that, but there is another credit you can claim on your business tax return at year end. You can find out more about that credit from your CPA!
They’ve done it! Here’s a great opportunity if you are thinking of hiring during 2010.
by David Knoble, CPA, PLLC
Serving Non-Profits, Businesses & Individuals
Rock Hill, SC