IRS Releases New Form W-11 Required for the New Hire Act Incentives

The IRS has posted the finalized Form W-11, Hire Act Employee Affidavit, that a new hire signs under penalty of perjury indicating that he or she was employed for a total of 40 hours or less during the 60-day period ending on the date the employment begins, thus qualifying the employer for the new HIRE incentives.

The “Hiring Incentives to Restore Employment Act” (HIRE Act) encourages companies to hire unemployed workers by exempting the employer from the employer’s share of the 6.2% Social Security payroll tax on that employee’s wages for the remainder of 2010. Thus, if the newly-hired and previously-unemployed worker earns $106,800 after March 18, 2010 and before the end of the year, the company could save a maximum of $6,621. In addition, the Act provides employers with a business tax credit if new hires are retained for at least 52 consecutive weeks. The credit(1), which will be taken on the employer’s 2011 tax return is non-refundable and is the lesser of $1,000 or 6.2% of the wages.

Additional Form Changes to Watch For:

• Form 941. IRS will be revising the second quarter Form 941, Employer's Quarterly Federal Tax Return, due on Aug. 2, 2010. It expects to finalize the new version sometime in April 6.

• Form W-2/W-3. There will be a new code on box 12 of the 2010 Form W-2 (Code CC) to indicate that a new hire had wages that qualified for the payroll tax exemption. Form W-3, Transmittal of Wage and Tax Statements, will be revised to include a line for total aggregate exempt wages.

(1) In order to be eligible, the employee's pay in the second 26-week period must be at least 80% of the pay in the first 26-week period. This credit is not available for domestic workers.

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