SILKIN MANAGEMENT GROUP: DID YOU HIRE ANYONE THIS YEAR?

There Might Be Some Tax Savings
Part 2

In yesterday’s Silkin Management Group blog (which you can link to here: http://silkinmanagementgroup.net/), we wrote about possible savings on social security taxes on certain types of employees hired during 2010. There are very specific terms that must be met for the employee to qualify for this tax savings but, if they do qualify, substantial savings could be realized for Silkin Management Group clients and non-clients alike.

There is one more potential financial gain for Silkin Management Group clients and any business that has hired employees this year. This is a “tax credit for retaining new hires”. Here’s how it works.

Above and beyond the Social Security tax exemption discussed in yesterday’s Silkin Management Group blog, employers can also claim a new tax credit of up to $1000 for wages paid to each qualified new employee. A qualified employee is defined the same way as defined for the above mentioned Social Security tax exemption - that is they are full or part-time workers who: a) start work after February 3, 2010 and no later than December 31,2010 and b) they were not employed more than 40 hours during the 60 day period ending on the start date. They also cannot displace a current employee unless that person quit voluntarily or was discharged for cause.

Here are the requirements to collect this tax credit:
• You must keep the worker on the payroll for at least 52 consecutive weeks
• The wages during the second 26 weeks must equal at least 80% of wages paid during the first 26 weeks.
• The credit equals the lesser of a) 6.2% of qualifying wages paid during the 52 consecutive week period for b) $1000.
• To claim the $1000 credit, the employee must be paid at least $16,130 during the 52 week period.
• The credit is claimed in the tax year that the 52 week period is met for the worker. (Therefore the credit will be on your 2011 return).

Silkin Management Group clients and non-clients alike should look at anyone they hired this year and see if they fit into the parameters outlined above. If so, contact your accountant to make sure you take advantage of this potential tax savings.

If you’d like more information about Silkin Management Group, contact us at 800-695-0257.

Bill Hickey
Silkin Management Group Consultant