Form 8850 is used for the work opportunity credit which are credits that businesses can take advantage of with the passing of the Hiring Incentives to Restore Employment Act in 2010. This act was passed by Congress to encourage existing companies and businesses to open up their doors to their surrounding communities and provide employment to them. The main reason why the government issues tax credits for businesses is the fact that they want to encourage positive acts and behavior that can only bring about the improvement of economy, society, and environment for all.
The Hiring Incentives to Restore Employment Act basically offers two major credits that companies can look forward to earning by filling out form 8850 on each new hire. The first tax credit is given to companies that hire new employees that have been unemployed for at least 60 days prior to hiring. The employee tax credits here come in the form of a tax break in the Form 8850 taxes that the company pays for every employee. If the new hire follows the described requirements, the business is exempted from paying the Social Security taxes of that particular employee specifically for the first year that he is employed.
The second of the two tax incentives provided by the HIRE Act is the issuance of HR tax credits to businesses that hire new employees. If the employees can stay in the job for at least 52 weeks, then the business automatically gets one thousand dollars in employee tax credits for that particular employee, which is a good thing if you have hired several employees for more than a year and who were hired between February 3, 2010 and January 2, 2011).
With HR tax credits like these mentioned, both the employer and the employee benefit. The employer benefits from lower taxes he can pay at the end of the year. The employee benefits from the regular employment given to him in a difficult time of economic crisis.
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