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2010 Hire Act Offers Tax Breaks for Employers
This March, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act, which has created a new payroll tax exemption and the new Hire Retention Credit for employers who hire new, previously unemployed, workers. Here's what you need to know about the new law:

1. The new law is in effect for employers who have hired new, previously unemployed workers after February 3, 2010 and before January 1, 2011.
2. Employers who hire unemployed workers may qualify for a 6.2 percent payroll tax incentive on wages paid after March 18. This exempts them from the employer's share of Social Security paid to those new hires.
3. For each qualified employee retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return so long as their wages did not significantly decrease in the second half of the year.

How to Claim the Payroll Tax Exemption

1. Form 941 has been revised beginning with the second calendar quarter of 2010. (Credit for wages paid from March 19 through March 31 can be claimed in the second quarter).
2. With new Form W-11, each eligible new hire must certify that he or she was unemployed during the 60 days prior to beginning work or worked fewer than 40 hours for anyone during the 60 days prior to employment. The employer doesn't forward the form to the IRS, but retains it with their payroll and income tax records.
3. Those who qualify are new hires filling new, added positions as well as those filling existing positions as long as they are replacing workers who left voluntarily or who were terminated.
4. Family members and other relatives do not qualify, nor do household employers and federal, state and local government employers (other than public colleges and universities).

For more details, visit IRS HIRE Act.