New jobs bill, how do I get the most retention tax credits.

President Obama signed into law a new jobs bill (HIRE Act) in March of 2010. The jobs bill pays you Retention Tax Credits to hang onto your employees.

As an incentive to retain employees who qualify for Social Security tax forgiveness, the jobs bill provides up to a maximum $1,000 tax credit to employers for each qualified retained employee as a Section 38(b) business tax credit. The credit is the lesser of 6.2% of wages or $1,000.

To be eligible for the jobs bill credit the qualified retained employee must:

1. Be employed for 52 consecutive weeks. There is no provision for prorating the credit.
2. Earn wages during the last 26 week period that are at least 80% of the wages for the first 26 week period.

Note

1. These jobs bill tax credits will be available to be taken on employers’ 2011 income tax returns.
2. The jobs bill does not allow carry back of any unused Section 38 business tax credits that are attributable to the provision for retaining workers.

As a Professional Employee Company, we want to note that the Congressional Record makes clear that a PEO client is entitled to the retention credit.

Modern Business Associates is available to assist as you navigate through the HIRE Act jobs bill and work toward maximizing your retention tax credits. While we focus on these areas, you can concentrate on your core business needs and goals. Should you have any questions, please do not hesitate to contact us.