IMPORTANT NEW PAYROLL TAX CHANGE FOR 2010 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 Incentive to Restore Employment (HIRE) Act. Employers who hire unemployed workers or recall employees who were laid off (after Feb 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2 percent payroll tax return savings. This would exempt the employer from their share of the Social Security tax on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits. This DOES NOT affect the employee’s payroll check. This is a savings for the employer only. The employer share of Medicare taxes (1.45%) would still apply to these wages.   For an employee with wages of $30,000 this is a savings of $1,860 to the employer.   In addition, for each worker retained for at least one year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.   New hires filling existing positions also qualify, but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.   All new hires and employees returning from a layoff must complete Form W-11. The employee, certifying that he or she was unemployed during the 60 days before beginning work or worked no more than 40 hours for anyone during the 60-day period, completes this form. Businesses, agricultural employers, and tax-exempt organizations all qualify to claim this payroll tax benefit. The W-11 is retained by the employer and used to properly calculate payroll taxes for the second, third and fourth quarters of 2010.   Employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010. For most employers this is Form 941.   Employers who wish to claim the Work Opportunity Tax Credit (WOTC) instead for a qualified employee cannot claim this payroll tax exemption for that employee.   If you have questions you may contact our office.   Form W-11 is available at our office or at IRS.gov along with common questions and answers.