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President Obama recently signed into law job-creation legislation that provides tax breaks to employers in an effort to encourage hiring and investment.
Specifically, companies that hire workers (after February 3, 2010, but before January 1, 2011) who have been unemployed for at least 60 days will not be required to pay the workers' 6.2 percent Social Security payroll tax in 2010. In addition, the company will receive a tax credit up to $1,000 (depending upon the wages earned by the employee) for each newly hired employee who remains employed for one year.
The new law requires employers to get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before hire or that he or she has worked fewer than a total of 40 hours during the prior 60-day period. The Internal Revenue Service (IRS) is currently developing a form employees can use to make the required statement. Employers claim the payroll tax benefit on the federal employment tax return they file with the IRS. Revised forms and further details on these two new tax provisions will be posted on the IRS' Web site during the next few weeks.
The legislation also allows employers to depreciate newly purchased equipment more quickly and extends highway and mass transit programs through the end of the year.
