$1,000 retained worker credit

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In 2010, Congress passed the HIRE Act which included a credit for businesses that hired unemployed workers.  If the new employee had been out of work for 60 days prior to hiring, the business was allowed a “payroll tax holiday” on the Social Security tax for that eligible employee.  This credit was available on wages paid from February 3, 2010 through December 31, 2010.  The credit was claimed on the employers payroll tax returns.

Along with the “payroll tax holiday”, if the same worker is retained for 52 consecutive weeks, the employer is allowed a credit equal to the lesser of $1,000 or 6.2% of the workers wages.  The employees wages in the second 26 weeks of employment need to be 80% of the first 26 weeks of employment.

Since the HIRE Act was passed in 2010, the first time the $1,000 credit would be available is on the 2011 business  tax return, 52 weeks later.  The credit will be claimed on Form 5884-B.

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