Federal HIRE Act offers a tax credit on social security, how much can my company earn?

President Obama signed into law the Hiring Incentives to Restore Employment Act ( HIRE Act ) in March of 2010. The federal HIRE Act carries a tax credit on Social Security. It starts immediately for employers hiring qualified employees through the remainder of 2010.

The best way to generate the maximum tax credit on Social Security is to hire qualified employees early in the year, since the exemption stops on wages paid after January 1, 2011.

• If an employee earning $40,000 annually is hired on April 1, 2010, the Social Security tax credit to the employer would be approximately $1,900.
• If the same employee was not hired until Aug. 15, 2010, the savings would be lowered to $950.

The tax credit on Social Security can be used to offset scheduled tax deposit liabilities beginning April 1, 2010 and accrue with each payroll processed.

Employers will receive a 6.2% Employer Social Security Tax Exemption on wages paid to “qualified employees” after March 18, 2010 and before January 1, 2011, up to the Social Security maximum of $106,800.

The maximum credit per qualified employee is $6,621.

Pay close attention to the HIRE Act requirements the employee must meet to activate the tax credits.

Modern Business Associates is available to assist as you navigate through the federal HIRE Act and work toward maximizing your tax credit on Social Security. 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.