IRS Releases Special Payroll Tax Exemption Forms

The Internal Revenue Service (IRS) Wednesday released a new Form W-11, the affidavit individuals must complete to confirm that they are qualified employees under a new law that provides tax incentives for businesses hiring new workers.  The IRS also released a draft Form 941, Employer's Quarterly Federal Tax Return, on which employers can claim the payroll tax exemption for eligible new hires beginning with the second calendar quarter of 2010.  The IRS announced that the final form will be released next month along with the form's instructions. Under the Hiring Incentives to Restore Employment (HIRE) Act, employers can receive an exemption from their 6.2 percent share of Social Security payroll taxes on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.  To qualify, employees must fill out the new Form W-11 under penalty of perjury to certify they have not been employed for more than 40 hours during the 60-day period they were unemployed. The HIRE Act also provides an additional income tax credit of up to $1,000 for every new employee retained for 52 weeks.  The FAQs regarding the HIRE Act's employer tax benefits are available at IRS' website here.