Following are the rules for eligibility of this tax credit:
This hiring must may be made from 3 February, 2010 to 1 January, 2011. The newly employed individual must had been unemployed for more than sixty days or had not worked for more than 40 hours with previous employee before he was employed.
Employers will also going to receive a tax relief if he hires the employee for a minimum period of 52 weeks. The tax relief will be allowed lesser than or equal to $1000, or it will constitute 6.2% of wage he will be paying to the new employee.
Employer cannot replace an employee by a more qualified employer until the previous employee has willingly shifted himself to another position. Employees who own more than 50% of the business cannot be held as employees. Employees who have been paid $106500, employer had to pay tax on his social security contribution.
Benefits of this Act
This act will encourage the employer for not only hire but also retain his employees as this act will not only relief tax of employers but also allow him a tax credit for one year.
By hiring the unemployed persons will exempt employer's portion of contribution in disability allowance, survivor's allowance, old age allowance as well as the contribution in social security. Although employee will pay the tax on social security allowance but it is exempt for employer.
Employer had to pay up to 15% tax on every dollar income he pays to his employee; this act will reduce this tax up to 6.2%.
This act also increase the limit of deduction from $250,000.