As the economy continues to show signs of recovering and the demand and supply for goods and services take hold, the time will come to increase staffing levels. Could that time be now for you?
Several federal and some state incentives for hiring and retaining new employees are available right now that employers may want to seriously consider taking advantage of for hiring and retaining employees in 2010.
Below is a brief synopsis of some of the incentive programs now available with links for you to get more information and decide if they apply to you and if now is the time to increase your headcount.
Hiring Incentives to Restore Employment (HIRE) Act
Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act. The sooner you hire the bigger the benefit you’ll receive. To take advantage of these incentives you must act before the end of 2010:
The two tax benefits are especially helpful to employers who are adding positions to their payrolls. The HIRE Act provides certain employers with relief from their share of the taxes on wages paid to a “qualified individual” defined as someone who:
- begins work for a qualified employer after Feb. 3, 2010 and before Jan. 1, 2011;
- signs an affidavit certifying that (under penalties of perjury) he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.
- is a new hire – new hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause; and
- is not related to the employer
The IRS has developed Form 11 that new employees can use to make the required affidavit certification mentioned above. The completed form is to be kept on file by the employer and is not submitted to the IRS.
Eligible employers: Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.
How to get the benefit: Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010.
You should consult your tax advisor prior to implementing either benefit to be sure you will receive the maximum incentives from these programs.
Revised forms and further details on these two new tax provisions will be posted on IRS.gov during the next few weeks.
To read the full press release http://www.irs.gov/newsroom/article/0,,id=220326,00.html
See HIRE Act: Questions and Answers for Employers
Oregon Dependent Care Assistance For Employees Program
Oregon is among 20 states in the nation that offer a state tax credit for dependent care assistance provided to employees. Oregon’s tax credit permits an employer to offset 50 percent of its child care expenditures against its state tax liability. The credit allows an annual limit of $2,500 per employee.
For more information on the Oregon Dependent Care Tax Credit, click here.
To find out which other states offer a dependent care tax credit you can conduct a web search, or you can email me for more information.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit incentive that the Congress provides to private-sector businesses for hiring individuals from twelve target groups who have consistently faced significant barriers to employment. The main objective of this program is to enable the targeted employees to gradually move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while the participating employers are compensated by being able to reduce their federal income tax liability. WOTC joins other workforce programs that help incentivize workplace diversity and facilitate access to good jobs for American workers.
For more information click here http://www.doleta.gov/business/incentives/opptax/
ETA’s WOTC publications provide a plain-English overview of the program:
ETA Handbook No. 408 for the WOTC Program and the Welfare-to-Work Tax Credit, written in November 2002 and amended in August 2009, provides more information on WOTC:
WOTC Eligible New Hires
To be eligible for WOTC a new hire must have began to work for an employer after December 31, 2006 and before September 1, 2011, the new hire must meet the minimum employment or retention period requirements outlined below, and the new hire must belong to one of the following 12 WOTC target groups.
WOTC Benefit Amounts
The WOTC benefit claimed by an employer is determined by the hours worked by the new employee and the employee’s WOTC target group. New employees who work at least 400 hours are eligible for a larger credit. The credit is 25% of qualified first-year wages for those employed at least 120 hours but fewer than 400 hours, and 40% for those employed 400 hours or more.
The maximum benefit amounts are determined by the employee’s WOTC target group. Most target groups’ maximum credit is $2,400, but some are eligible to receive more:
- $2,400 for each new adult hire;
- $1,200 for each new summer youth hire,
- $4,800 for each new disabled veteran hire, and
- $9,000 for each new long-term family assistance recipient hired over a two-year period.
The links above will take you U.S. Department of Labor resources and information.
Oregon employers should also check out the Oregon.gov website for additional WOTC resources. The link is provided here:
http://www.oregon.gov/EMPLOY/ES/BUS/tax_incentive_programs.shtml
Worksource Oregon
The following link will take you to the Worksource Oregon website page that outlines several other Employment Service Programs for Employers:
Employment Service Programs for Employers
