Monday, January 17, 2011

The Hiring Incentives to Restore Employment Act adds credit for hiring new workers

In an effort to jump start the economy and employment, Congress is providing a credit of up to $1,000 for so called  “retained workers” in 2011 pursuant to Section 102 of the HIRE Act, P.L. 111-147, for any tax year ending after Mar. 18, 2010.  A “retained worker” is defined as any qualified individual (as defined for purposes of the employer payroll tax holiday that was in effect for hiring unemployed workers, who makes a proper certification on Form W-11 and began employment with a qualified employer after Feb. 3, 2010, and before Jan. 1, 2011 and
    (1) who was employed by the taxpayer on any date during the tax year,
    (2) who was employed by the taxpayer for a period of not less than 52 consecutive weeks, and
    (3) whose wages (as defined for income tax withholding in Code Sec. 3401(a) ) for that employment during the last 26 weeks of the period (described in item (2) above) equaled at least 80% of the wages for the first 26 weeks of that period. (HIRE Act §102(b))
Make sure to file the Form W-11 to claim this credit for each such worker hired.

Shorter S corp built-in gain period. For tax years beginning after Dec. 31, 2010, the “Small Business Jobs Act of 2010,” the tax title of H.R. 5297, the Small Business Lending Funding Act ( P.L. 111-240 ) provided that for S corporation tax years beginning in 2011, no tax is imposed on the net unrecognized built-in gain of an S corporation if the fifth year in the recognition period preceded the 2011 tax year. ( Code Sec. 1374(d)(7)(B)(ii) )

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