Just ran across this. I don't know how many EMPLOYEE based salon
owners we have on the list, or maybe this concerns a family member
but...HIRE Act was signed in March of 2010.
The Administration wants business to hire new employees and they are
giving employers a tax holiday.
Just for your information, when you are an employee you get a pay
check. If you look at your paycheck you will see a deduction or
withholding on your paycheck stub of social security and medicare,
6.2% of your income for social security and 1.45% of your income for
medicare. (for example: $500.00 income x 1.62% S.S. = $31.00.
$500.00 income x 1.45 medicare = $7.25). This $38.25 (31.00+7.25)
comes out of YOUR income, This is what YOU pay. Your employer will
send $38.25 to the IRS in your name, and this is what you get when
you retire. Think of it as a savings account.
Then what many don't know and usually is not listed on your paycheck
stub is the employer ALSO sends and ADDITIONAL 6.2%(example 31.00)
for your social security and 1.45% (7.25)for medicare. The employer
sends ($38.25) to the IRS in your name and this is what you get when
you retire. Think of it as a savings account.
So with your contributions($38.25) and with your employers
contributions(38.25) over the years, it adds up and this is what your
social security/medicare is when you retire. You probably get a
statement every year. (what is scary are those that are independent
contractors and don't pay their taxes because they don't have an
employer don't realize that then there will be ZERO social security
for you because you didn't pay in the first place)
So now since I've explained how it works, now for the HIRE Act. If
you hire a NEW employee starting for the period of February 3, 2010
thru December 2010, the employer DOES NOT have to pay the social
security part of the withholding, 6.2%(31.00) The employer must still
pay the 1.45% medicare part.
The employee withholding is still the same. The 6.2% is a tax
holiday for the EMPLOYER to help stimulate the economy.
The new employee must have been unemployed for 60 days prior to the
hiring, and if they did work, 40 hours maximum in the whole 60 days.
There is no age limit, seasonal work or students.
This does not affect current employees, only new employees.
Cannot be used to replace an employee (kind of odd the way the
explain it, the x employee must have been terminated or quit voluntarily?????)
The employee must sign a form to agree to it.
The employer does not have to agree to have a tax holiday.
The links below, one for the IRS have FAQ, and also found a couple of
websites that explains it a little better.
I think that the reason the employee has to sign to agree to this, is
because if you remember the employer pays your social security
($31.00)and you get it when you retire. If the employee agrees to
this, you will not get this money back, it is gone. But if you are
out of a job does this small amount really add up over a 10 month
period to make a difference?
Know this is boring to some, but when I owned the salon, I did all my
own payroll, and this would be major news to me if I just read this
and had hire new employees!! diana from indiana
http://www.irs.gov/businesses/small/article/0,,id=220745,00.html
http://www.mcguirewoods.com/news-resources/news/5016.asp
http://www.littler.com/PressPublications/Lists/ASAPs/DispASAPs.aspx?id=1474
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