Payroll: 2010 HIRE Act

NOTE

The HIRE act is expired! There is no need to follow these instructions!

Summary

The Hiring Incentives To Restore Employment (HIRE) Act was signed into law by President Obama on March 18, 2010. The Act primarily provides employers with incentives to hire and retain new employees. One provision of the Act exempts a qualified employer from paying the employer’s share of the social security employment taxes (6.2 percent of the first $106,800 of wages) for wages paid in 2010 for any new employee hired after February 3, 2010, and before January 1, 2011, if the new employee (1) was previously unemployed and (2) does not replace another employee of the employer.

W-2 Instructions relating to the HIRE Act from the IRS website:

http://www.irs.gov/instructions/iw2w3/ch01.html#d0e686

HIRE wages and tips paid to qualified employees. Employers who hired a qualified employee under the HIRE Act must report the amount of social security wages and tips paid after March 18, 2010, for which the employer claimed the payroll tax exemption. A qualified employee is one who:

1. Was hired after February 3, 2010, and before January 1, 2011;
2. Was not hired to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing);
3. Was not a family member or other related individual of the employer; and
4. Signed Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, or other similar statement under penalties of perjury, certifying under penalties of perjury that he or she had not worked more than 40 hours during the 60 days prior to beginning employment.

Report the amount of wages and tips paid to the qualified employee for which you claimed the payroll tax exemption in Box 12, using code CC. This will include wages and tips paid to the qualified employee from April 1, 2010, through December 31, 2010, for which you claimed the payroll tax exemption, plus wages and tips paid to the qualified employee from March 19, 2010, through March 31, 2010, for which you claimed a credit in the second quarter of 2010. The amount may not exceed $106,800 (2010 maximum social security wage base). For more information, visit IRS.gov and enter the keywords HIRE Act payroll tax exemption.

Keystone Setup

Check the HIREACT Category_Id Active for each employee with qualified HIRE wages in Employee Maintenance.

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Enter the amount of the HIREACT qualified wages for each employee in Adjust Employee Balances.

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Add the Link/Definition to W-2 Setup box 12.

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