Jobs Bill Signed Into Law Will Provide FICA Tax Holiday for Businesses Hiring Unemployed Workers
The “Hire Now Tax Cut” in the $18 billion jobs bill which passed the Senate March 17th and signed into law by the President March 18, 2010 will exempt a business from paying the employer’s portion of the 6.2% Social Security payroll tax (FICA) for the rest of the year on “qualified” workers hired after February 3, 2010. To qualify, the previously unemployed hire must have worked less than 40 hours during the 60 days prior to their hiring. Medicare taxes must be paid. The FICA tax holiday begins immediately upon the bill’s enactment (March 18th) and continues through December 31, 2010. FICA taxes paid by the employer in the first quarter that are subject to the exemption will be credited toward the second quarter.
Businesses will also receive a $1,000 income tax credit on 2011 taxes for workers hired during this period (February 3 – December 31, 2010), whose level of employment is maintained for 52 weeks after their initial employment.
To qualify for the Social Security payroll tax exemption, the employee:
• Must certify by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date the individual begins their employment,
• Is not limited on how much they can earn to qualify;
• Cannot replace an existing worker unless that worker was fired for cause or quit voluntarily.
Extension of Section 179 Expensing. The bill also extends 2008 and 2009 Section 179 expensing thresholds so that taxpayers may elect to write-off up to $250,000 of certain capital expenditures -- subject to a phase-out once expenditures exceed $800,000 -- in 2010 in lieu of depreciating those costs over time.
Please note – While the legislation is relatively short and concise, you should consult with a qualified accountant before taking advantage of the provisions in this legislation. Also, you will need to ensure that proper documentation in the form of an affidavit for each hired employee is retained in your records for the FICA tax holiday. This message should not be construed as tax advice. You should consult with competent tax authorities before making hiring decisions based on this notice.