Skip to main content

June 15, 2010 | HR Compliance | Posted by Ascentis

Quarterlies and the New HIRE Act Credit

Now that we’ve all heard about the HIRE Act and your company has decided whether to apply for the HIRE Act credit and you’ve collected the W-11 affidavit how do you go about getting the HIRE Act credit?

You may reduce your tax liability on a pay period basis by the credit, but in order to actually get the credit you need to make sure to complete the appropriate lines on your 941.

Make sure to prepare for the quarterly filing because unlike COBRA, where you could take the credit in the next quarter, the credit for the first quarter on the HIRE Act must be taken in the second quarter and the credit for the HIRE Act for each quarter after the first quarter must be taken in the quarter the wages are paid.  This means if you aren’t prepared you may have to file amendments in order to receive the credit for the HIRE Act.

New Lines on the Form 941 –

Line 6a – Number of qualified employees first paid exempt wages/tips this quarter

This is simply a field which counts the number of employees that were hired and paid for the first time during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act.  Basically this field lets the government know how many new employees were eligible for the HIRE Act during the quarter being field.

Line 6b – Number of qualified employees paid exempt wages/tips this quarter

This is simply a field which counts the number of employees that were paid during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act.  This count would include the employees that are reported on line 6a.  Basically this field lets the government know how many employees in total on the quarterly return were eligible for the HIRE Act during the quarter being field.

Line 6c – Exempt wages/tips paid to qualified employees this quarter

Up until this point you have only entered headcounts, now it’s time to get down to entering the dollar value of wages.  You will now enter the wages or tips that are exempt from the employer portion of the social security tax under the HIRE Act on this line.  You should have wages to show for all of the employees counted on line 6b.

Line 6d – Social security tax exemption

It’s time to find out what the current quarter credit is for your company.  You now will do some simple math by taking the wages on line 6c and multiplying them by 6.2% to get the HIRE Act Credit for the quarter you are filing, which you will enter on this line.

Line 6e – Total taxes before adjustments

This line is just a new subtotal line where you will add up lines 3, 5d, and subtract line 6e.

When filing second quarter only – complete these lines. Line 12c – Number of qualified employees paid exempt wages/tips March 19 – March 31st

This is simply a field which counts the number of employees that were hired and paid for the first time from March 19-March 31st that are exempt from the employer portion of the social security tax under the HIRE Act.  Basically this field lets the government know how many new employees were eligible for the HIRE Act during the first quarter.

Line 12d – Exempt wages/tips paid to qualified employees March 19 – March 31

You will now enter the wages or tips that exempt from the employer portion of the social security tax under the HIRE Act that were paid from March 19-31st on this line.  You should have wages to show for all of the employees counted on line 12c.

Line 12e – Social security tax exemption for March 19-31

You now will do some simple math by taking the wages on line 12d and multiplying them by 6.2% to get the HIRE Act Credit which you will enter on this line.

If you had to do a lot of preparing to file your quarterlies for the HIRE Act and it wasn’t as simple as getting the W-11 affidavit and marking a field in your payroll, you might want to contact us to see how we can make your processes easier.

 

Subscribe for Updates