This new law provides for three major changes for businesses in 2010 and 2011. In 2010 the law extended the rapid write-off rules for equipment purchased through the end of 2010. This allows small businesses to write off up to $250,000 of equipment purchased during 2010, rather than depreciating them over the normal 5-7 years.
The HIRE Act also passed a new employer FICA tax holiday for new employees hired after February 3, 2010 who had not worked more than 40 hours in the 60 days prior to hiring. For those employees, any wages paid after March 18, 2010 are exempt from the employer’s matching FICA tax of 6.2% through the end of the year if the employee signs an affidavit regarding their limited work prior to hiring. The FICA tax exemption is available on the first $106,800 of wages paid to each qualified employee during 2010, and is available for both full and part-time employees.
In 2011 any new FICA exempt employees who were hired in 2010 and who are still with the company after 1 year and still earning at least 80% of 2010’s wages will also qualify for a $1,000 per employee tax credit. Family members, owners and a few other employees are not qualified for the FICA exemption or the New Hire credit.
Our office will be staying on top of all developments, with an eye toward how to best maximize results under the new law for our clients. We are prepared to advise our clients on all compliance rules and tax-reduction opportunities that undoubtedly will arise.
In the meantime, if you have any questions about the new law, please do not hesitate to call our office.
Sincerely,
Donya Oneto, CPA
