The IRS has recently posted a revised payroll tax form that many eligible employers can use to receive the new payroll tax exemption.  This exemption is meant to encourage employers to hire and then retain new workers.  The exemption would apply to new hires after Feb. 3, 2010 and before Jan, 1, 2011.  The employer may qualify for a 6.2% payroll tax incentive.  Essentially this will exempt employers from paying their share of the Social Security tax on wages paid to these new hires after March 18.  There will be no effect on the employee's future Social Security benefits due to this reduction. 

Additionally, for each employee that qualifies, and is employed for at least a year, and whose wages did not significantly drop in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their tax return. 

For more information on the Hiring Incentives to Restore Employment (HIRE) act signed by President Obama March 18, see the IRS.gov, or the Questions and Answers page.

How to claim the payroll tax exemption

Employer's quarterly Federal Tax Return (Form 941) has been revised for use beginning in the second quarter of 2010.  The HIRE act does not apply to the first quarter, but applies starting in the second quarter.  Instructions for form 941 are now available on the IRS website.

The HIRE act does require that employers receive a signed statement from each eligible new employee, certifying under penalty of perjury that they were not employed for more than 40 hours during the 60 days before beginning employment with that employer.  Employers can use form W-11 to satisfy this requirement.  Although employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS, but instead retain them along with other payroll and income tax records.

Employers who are adding positions to their payrolls or filling existing positions (granted previous employees left voluntarily or were terminated for cause) will benefit from these tax incentives.  Family members and other relatives do not qualify for either of these benefits. 

Businesses, agricultural employers, tax-exempt organizations, tribal governments, and public colleges and universities all qualify to claim the payroll tax exemptions.  Federal, state, and local governments (other than public colleges and universities) and household employers are not eligible for these tax benefits. 

The new tax credit is available to small employers that pay at least half the cost of single coverage for their employees.

The maximum credit is 35% of premiums paid in 2010 by eligible small business employers and 25% of premiums paid by eligible employers that are tax exempt organizations. In 2014, the maximum will increase to 50% of premiums paid by eligible small business employers and 35% of premiums paid by eligible employers that are tax exempt organizations.

It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based, in part, on the number of FTE, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.

The maximum credit goes to smaller employers - those with ten or fewer FTEs paying annual average wages of $25,000 or less.

Eligible small businesses can claim the credit as part of the general business credit starting with 2010 income tax return. For tax-exempt employers, the IRS will provide further information on how to claim the credit.

The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify.

Jaycie Wakefield joins Archer Group as our newest Front Desk Coordinator. Jaycie graduated from Western Washington University with her Bachelor degree in fine arts.

Jaycie's duties include front desk customer service, telephone direction, data entry and other various clerical duties. Her helpful attitude and helping hand is a key factor to our front desk.

Welcome Jaycie!

Clint McDermott, a graduate from Western Washington University's Accounting program has joined Archer Group as a Tax Reviewer.

Clint has become a part of the team after many years' experience of tax review, research and tax preparation. His attention to detail and strong work ethic make him a valuable part of our team and an asset to our clients.

Welcome Clint!

Ryan McDonald, an accounting graduate of Western Washington University joined Archer Group as a full-time staff accountant after interning during his last year of schooling.

Ryan applies his abilities and schooling toward tax preparation, accounting services, financial statements, and balance sheets and audits for our clients. Ryan's excellent grasp of accounting makes him an outstanding resource for our clients.

Welcome aboard Ryan!

We are pleased to announce our new website and blog. Please take some time to browse our articles and updates, which will be updated frequently in an effort to keep you up to date on changes in regulations, laws, etc...

If you have any questions or suggestions, we welcome your input.

Diana Duggan, a graduate from Western Washington University has joined Archer Group as administrative support for the tax department.

Diana utilizes her skills in communication and organization to support the firm through tax assembly, billing, client correspondence and other clerical duties. Diana's talents and abilities are an asset to our clients and team.

Welcome Diana!

Tonya Beltman joined Archer Group after receiving her Applied Science Accounting Technician Degree from Bellingham Technical College.

Tonya is a valuable addition to our team, providing our clients with bookkeeping services including payroll, accounts payable and month-end reports. Her positive attitude and organization make her an asset for our clients.

Welcome Tonya!