Tax Benefits Available to U.S. Companies That Hire Unemployed Workers

The "Hiring Incentives to Restore Employment Act" (HIRE Act) created tax benefits to encourage U.S. employers to hire workers. The good news for the attractions industry in the U.S. is that these tax incentives may apply to eligible summer hires.

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011), may qualify for an exemption from the employer's share of Social Security tax on wages paid to those workers after March 18, 2010. Even better news if your business is not seasonal: If an eligible new hire is retained for at least a year, the businesses may claim a "new hire retention credit" of up to $1,000 per worker on their 2011 return.

So who's an eligible employee?
According the IRS, qualified employees are individuals who start work with a qualified employer after Feb. 3, 2010, and before Jan. 1, 2011, who have been unemployed or employed for less than 40 hours total during the 60-day period ending on the date such employment begins, and who are not family members of or related in certain other ways to the employer.

Do students or recent graduates qualify?
Yes, if the employee meets the above qualifications. It is not necessary that the individual was previously employed and has lost his or her job to be a qualified employee.

What does an eligible employee need to do for my business to qualify for this tax credit?
Qualified employees must certify by a signed affidavit, under penalties of perjury, that they have not been employed for more than 40 hours total in the past 60 days—ending on the date they start employment with your company. The IRS plans to issue a model affidavit that can be used for this purpose.

Do I need to fill out any paperwork?
Yes, employers need to complete an IRS Form W-11 and submit it with the signed affidavit to take advantage of this program.

For information about the HIRE Act, including other FAQs and the tax form that must be completed to qualify for this tax credit, please visit the IAAPA Government Relations web site.