In March a tax credit was passed which provided incentives to employers who hired workers that had previously been unemployed. This tax credit, which expires in December 2010, offers an exemption on an employer’s share of Social Security tax for wages paid to these certain employees that were recently jobless.
While this tax credit is said to have helped create job opportunities for some unemployed men and women, there are employers who are wondering whether they can still benefit from this plan since they will only be able to claim this exemption until the end of the year. Obviously, employers who have recently hired a worker may not have been able to take full advantage of this tax exemption, which again has been available since March, but there are other benefits to this HIRE tax credit that may be helpful for certain business owners.
An addition to this tax credit for businesses that hire previously unemployed workers is that a company may get a tax credit for up to $1000 per worker if they are kept employed for one year. The IRS website states that employees who are retained for 52 consecutive weeks, and again were previously unemployed, will qualify an employer for this $1000 general tax credit for their business.
Many have argued that tax credits like this are what’s needed to jumpstart hiring in our nation, as there are reports that indicate companies have a substantial amount of cash on hand, but may be unwilling to hire on a large scale. Business loans are said to have been one of the problems that has stalled hiring, but many analysts believe that simply providing a business with the opportunity to borrow money will not necessarily create jobs, or if it does, these jobs may only be created in the future.
Businesses who are able to qualify for this tax credit for hiring new workers, obviously, have been able to add employment positions immediately, which is not only beneficial to these companies but is also helpful in combating unemployment. While this tax credit is only available through the end of 2010, employers may still be able to hire a worker and, if they keep them for a year, could still benefit from the general tax credit offered for employee retention.