New Hire Retention Credit

Employers who hired unemployed workers after Feb. 3, 2010, and before Jan. 1, 2011 and qualified for the New Hire Act Social Security tax exemption may qualify to claim a New Hire Retention Credit of up to $1,000 per worker on their income tax return.  For each qualified employee retained for at least 52 consecutive weeks, businesses may be eligible for a general business tax credit of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.  

To be eligible for the new hire retention tax credit, the business needed to

• hire a new employee under the New Hire Act guidelines and have filled out a W-11
• retain the new employee for at least 52 consecutive weeks from the hire date, and
• pay wages such that total wages in the final 26 weeks are at least 80% of the total wages paid during the first 26 weeks of employment.

 The HIRE retention credit is a general business credit to encourage retention of new hires and will be claimed on the employers income tax return. The amount of the credit is the lesser of $1000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period. The qualified employees wages for such employment during the last 26 weeks must equal at least 80% of wages for the first 26 weeks.