Now that we’ve all heard about the HIRE Act and your company has decided whether to apply for the HIRE Act credit and you’ve collected the W-11 affidavit how do you go about getting the HIRE Act credit?

You may reduce your tax liability on a pay period basis by the credit, but in order to actually get the credit you need to make sure to complete the appropriate lines on your 941.

Make sure to prepare for the quarterly filing because unlike COBRA, where you could take the credit in the next quarter, the credit for the first quarter on the HIRE Act must be taken in the second quarter and the credit for the HIRE Act for each quarter after the first quarter must be taken in the quarter the wages are paid.  This means if you aren’t prepared you may have to file amendments in order to receive the credit for the HIRE Act.

New Lines on the Form 941 –

Line 6a – Number of qualified employees first paid exempt wages/tips this quarter

This is simply a field which counts the number of employees that were hired and paid for the first time during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act.  Basically this field lets the government know how many new employees were eligible for the HIRE Act during the quarter being field.

Line 6b – Number of qualified employees paid exempt wages/tips this quarter

This is simply a field which counts the number of employees that were paid during the quarter you are reporting that are exempt from the employer portion of the social security tax under the HIRE Act.  This count would include the employees that are reported on line 6a.  Basically this field lets the government know how many employees in total on the quarterly return were eligible for the HIRE Act during the quarter being field. Continue reading →