Local Tech Wire

The accounting firm points out that businesses can save millions of dollars in quarterly payroll taxes under the Hiring Incentives to Restore Employment Act.

For an in-depth explanation of the opportunities,

For specific data points, HPG makes the following points:

“This month alone, business could save more than $350 million in quarterly payroll taxes nationally ($43 million in North Carolina, $10 million in the Triangle) because of the HIRE Act ,” the firm says.

The estimates are based on if the more than 488,000 new jobs are created in the United States (with 56,000 in North Carolina , and 14,000 Triangle area) and were filled by qualified employees at the start of the eligible period for a gross wage of $43,000 per year.

 

Here’s how:

1. Business do not have to pay the 6.2% Social Security Tax on qualified employees

  •  Affects employees hired after Feb. 3
  •  Unemployed or employed less than 40 hours during the 60-day period ending on the date the individual begins employment
  •  Seasonal, students, and temporary employees are included

2. Accounting departments may not know that a new hire is qualified

3. Need affidavits signed by qualifying employees by July 30

4. If employee lasts a year up to $1,000 in additional income tax credit is available

5. Can be coupled with other tax credits like Work Opportunity Tax Credit multiplying savings.

New hires that qualify as part of a special group:

  •  Veterans
  •  SSI recipients
  •  Ex-felons
  •  Vocational rehabilitation referrals
  •  Temporary Assistance for Needy Families recipients
  •  Reside in a designated community

6. Combined exemptions and credits could be more than $10,000 per new employee

An example from HPG:

A business would save more than $775 on the July 31 payroll tax filing for each new employee hired on March 18 that qualifies for the HIRE ACT exemption and earns $43,000 per year.

  • The savings will continue through the end of 2011. This means the employer could save more than $2,100 in payroll taxes on each qualifying new employee.
  • If the employee stays on the job 52 weeks, the company is eligible for an additional $1,000 in income tax credit.
  •  If they also qualify as an unemployed veteran under the Work Opportunity Tax Credit, the business is eligible for an additional income tax credits of up to $2,800
  • Combined tax exemptions and credits for this one employee could be as much as $5,900.

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