Financial incentives and tax credits are available--under certain circumstances--to small businesses to ease their burden and help them grow.
In addition to the two programs outlined below, the Columbus Chamber seeks small businesses (250 or fewer employees) who plan to hire new employees in October and November. Under certain circumstances, we can connect you to a funding source to reimburse you for on-the-job training. Contact the Chamber's director of workforce development, Andrea Applegate, for more information.
Federal Hiring Incentives to Restore Employment (HIRE) Act
The following information pertains to the federal Hiring Incentives to Restore Employment (HIRE) Act. (NOTE: The HIRE Act is unrelated Ohio's Project HIRE program.)
The HIRE Act creates a payroll tax credit for employers who hire workers who have been unemployed for at least 60 days and who are not replacement hires. For qualifying new employees hired after February 3, 2010 and before January 1, 2011, the employer can claim a credit equal to the employer’s share of Social Security taxes on wages paid in 2010. The bill also provides a credit of up to $1,000 for employers who retain such employees for at least 52 weeks.
The Internal Revenue Service (IRS) released new Form W-11 for certifying that employees are qualified employees for purposes of tax benefits under the HIRE Act (PL 111-147).
Employers must collect affidavits from each new employee in order for the employee to count as a qualified employee for purposes of the payroll tax credit and the employee retention credit. However, the employer should not send the affidavits to the IRS, but should retain them in its records.
The IRS has also posted questions and answers for employers regarding both the payroll tax exemption for hiring unemployed workers and the credit for retaining new hires. On the payroll tax exemption, the FAQs cover employer eligibility, employee eligibility, and how to claim the exemption.
Additional information regarding the HIRE Act, please contact the IRS.
Small Business Health Care Tax Credit
This new credit helps small businesses and small, tax-exempt organizations afford the cost of covering their employees. It is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small businesses to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to employers who pay at least half the cost of single coverage for their employees. Additional information is available from the IRS at Small Business Health Care Tax Credit for Small Employers
Eligibility Rules
- Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
- Business size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
- Average annual wage. A qualifying employer must pay average annual wages below $50,000.
- Both taxable (for profit) and tax-exempt firms qualify.
Amount of Credit
- Maximum Amount. The credit is worth up to 35 percent of premium costs paid by the small business in 2010. On January 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
- Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.
Three Simple Steps for Employers to Qualify
- To determine if your small business or tax exempt organization qualifies for the Small Business Health Care Tax Credit, follow this link to the IRS fact sheet.
Comments