TouchPoint Recruiting Group

Don’t Forget About the 2010 HIRE Act’s Retention Credit

March 3, 2011

On March 18, 2010, the government enacted the Hiring Incentives to Restore Employment (HIRE) Act. Many of our clients took advantage of this new tax benefit by hiring a previously unemployed worker (see qualifications below).

Two key tax benefits made this act attractive for employers. The first was a payroll tax exemption. Employers were exempt from paying the employer’s 6.2 percent share of social security tax on paid wages to qualified employees for the period of March 19, 2010, through December 31, 2010.

The second key benefit was a new hire retention credit. For each qualified employee retained for at least 52 consecutive weeks, employers are eligible for the new hire retention credit of 6.2 percent of wages paid to the qualified employee over the 52-week period, up to a maximum of $1000.

Qualified candidates are defined as:

Employees hired after February 3, 2010, and before January 1, 2011, who were unemployed or employed for less than 40 hours during the 60 days immediately preceding their employment with the qualified employer. A qualified candidate cannot be employed by the qualified employer to replace another employee of that employer, unless the other employee separated from employment voluntarily or was terminated for cause. A qualified candidate also cannot be related to the employer. For more information and frequently asked questions, visit the IRS website.