written by: GregoryJohansson•edited by: Jason C. Chavis•updated: 9/7/2010
The unemployment tax credit extends to the employers to receive funds for hiring employees that were previously unemployed. Utilizing this credit allows businesses to gain additional revenue and help ease the unemployment in the United States.
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An Important Tax Credit Today
Tax credits for unemployment usually extend to the employers. In some states, such as Kentucky, the employer gets $100 per person and the person must have been unemployed for 60 days prior to gaining the job and be on the job 180 days after. (Revenue.ky.gov)
Those who are getting unemployment can check with their local and state governments on what type of credits either the employer or the employee can gain by being hired.
In recent develpoments, the Jobs Bill was passed on August 9th by and the 5th Tier Bill is slated to be brought before Congress. As stated by the Examiner.com: “Senator Debbie Stabenow's (D-MI) "America's Want to Work Act" bill would allow for states with unemployment rates higher than 7.5 percent, to be eligible for an additional 20 weeks of benefits. In addition, the bill offers a direct "Job Creation" competent by offering employers up to a $2000 tax credit, for hiring unemployed job seekers that have exhausted all benefits or are on S-3706 "5th Tier" of benefits. “(Ross-Williams)
This tax credit, if passed, can make a big difference in jobs and the economy. Incentives for hiring unemployed workers can also benefit those who are seeking out small business loans through the SBA. Instead of worrying about what is paid back and how much the loan is for, those small business owners can look forward to gaining a tax credit for the employees they do end up hiring.
The HIRE tax credit that is offered now, allows the employer to get up to a maximum $1000 credit if the employee is there for a year. It also allows the employer to have a payroll tax exemption for 6.2 percent. The 5th Tier bill can help strengthen that and put people back to work with a win-win situation. (IRS.gov)
Someone may also opt for not having their taxes withheld but, this way, they’ll have to file it on the first tax return. Avoiding this king of money crashes is possible by paying a small amount more often. But, since we need to know who qualifies for the unemployment tax credit in the US, employers must check if there are some similarities with the following exempt situations from the FUTA (Federal Unemployment Tax Act) payments: the wages paid to a deceased employee/ deceased employee’s estate after his death, the wages for services made outside the US, wages paid between relatives (spouses, parents to children or vice versa), wages paid by a state or local government or by the Federal government and those paid by a foreign one, wages paid to newspaper sellers under 18, wages paid by hospitals to patients, schools to pupils or those paid by non-profit organizations.
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IRS.gov. HIRE Act: Questions and Answers for Employers. 23 July 2010. 11 August 2010