Small Business Owners (and large businesses) may qualify for two new tax breaks if they hired workers who were unemployed (40 hours per week) in the past 60 days, during March 19, 2110 and December 31, 2010. If you missed the memo on this exemption, lets hope the exemption is around for a few more years.

The first tax break is a payroll tax exemption, which gives an employer an exemption from their share of the 6.2 percent of the social security tax on the employee wages. You can use the usual, Form 941, to claim the tax break, starting with the second quarter of 2010.

The second business credit introduced is called the Business Credit for Retention of Certain Newly Hired Individual in 2010 and is up to $1000 per worker. This credit deals with providing a credit to a business when they hire and keep an employee for 52 consecutive weeks, or 26 weeks with a reduced benefit.

There are a few additional requirements which your tax professional will be more than happy to share with you. The important point is, you must let your tax person known that you may qualify for these payroll tax exemptions.

If you are attempting to prepare your own taxes, you would research the HIRE Act, which was established in March of 2010. Small or large business, tax exempt organization, and Indian tribal governments qualify. Household employers, federal state and local government employers, don’t qualify for the credit. Public colleges and universities do qualify.

Use Form W-11 to confirm that an employee is a qualified employee under the HIRE Act.

Source by Cassandra A. Ingraham