Map to Claiming the New Hire Retention Credit

 

One of the recent legislative attempts to reduce the unemployment rate includes the introduction of the Hiring Incentives to Restore Employment (HIRE) Act. This new law is tailored to offer tax benefits to businesses that hired qualified employees. One benefit of the Act, referred to as the New Hire Retention Credit, entitles businesses to a tax credit for qualified new employees who were retained for at least 52 consecutive weeks. The amount of the tax credit is the lesser of $1,000 or 6.2% of the wages paid to the worker during the 52 week period. Read on to determine your map for claiming the New Hire Retention Credit.

Which New Hires Qualify?

In order to determine which of those employees hired between February 4, 2010, and December 31, 2010, qualify, a business must answer “yes” to the following three questions:

1. Was the employee previously unemployed or employed for 40 or fewer hours during the 60 days leading up to the date his or her employment began?

2. Was the individual hired for a new position or to replace an employee who either left voluntarily or was terminated for cause?

3. Was the new employee a non-relative who was also not dependent on anyone who owned over 50% of stock, capital, and interest of business profits?

Getting the Credit

Now is the time for companies to start organizing their paperwork to ensure that they claim the New Hire Retention Credit on their 2011 income tax returns. Once business owners have identified the individuals who will qualify them for the credit, they should collect and organize the following documents and information:

● Form W-11 or an affidavit attesting that the new hire was either unemployed or had not worked for anyone more than 40 hours per week over the 60-day period that ended when he or she became employed with the credit-requesting employer. An employer creating his or her own affidavit will still be able to receive the credit as long as the affidavit contains the same statement and assurances (signed under penalty of perjury) as the W-11. The form or affidavit must be obtained by the time the employer requests the credit.

● Social Security number for each qualifying employee.

● Dates of employment.

● Wage information for each employee’s first 26 weeks of employment, as well as for the 52 week period.

To ensure that you receive all of the tax credits to which your business is entitled (and to help verify which of your employees hired between February 4, 2010, and December 31, 2010 are eligible for the credit), set-up an appointment today to meet with your Carr, Riggs & Ingram (CRI) accounting professionals. Not only will we complete your IRS forms and worksheets, but our CPAs can also work with you to uncover any missing exemptions and credits for your company. And that means that X marks the spot of your local CRI office!