Hiring an Unemployed Worker Can Save You Money

In March, the Hiring Incentives to Restore Employment (HIRE) Act was passed into law. This act provides two new tax benefits for employers who hire unemployed workers.

Employers who hire unemployed workers this year (after February 3, 2010 and before January 1, 2011) may qualify for a 6.2 percent payroll tax incentive. This means Social Security taxes for employers are waived through 2010 on wages paid after March 18, 2010.

The employer may also claim an additional business tax credit, up to $1,000 per worker, for each unemployed worker hired and retained for a minimum of one year. This credit can be claimed on the 2011 business tax return.

To qualify, the hired unemployed worker has to fill out an affidavit, Form W-11 (see www.irs.gov).

Hired family members and household employees are not eligible for this credit.