The Employee Retention Credit is a CARES Act relief measure for businesses. It is a fully refundable tax credit that eligible employers who are able to keep employees on payroll can claim. The Continuing Appropriations Act of 2021 has further extended and expanded the credit. A company that received the PPP loan is now eligible to claim this credit.
How much is the credit?
For 2020: 50% of the first $10,000 of qualified wages for a total of $5,000 per employee
For 2021: 70% of the first $10,000 wags paid PER quarter – for a total maximum ERC of $14,000 per employee.
Who is eligible for the ERC in 2020?
Businesses with less than 100 full time employees are eligible if either of these two things happened in 2020:
Your operations were fully or partially suspended due to a COVID-19-related governmental order, or
You experienced a 50% reduction in gross receipts
Who is eligible for the ERC in 2021?
Businesses with less than 500 full time employees are eligible if either of these two things happened in 2021:
Your operations were fully or partially suspended due to a COVID-19-related governmental order, or
You experienced a 20% reduction in gross receipts
If you are eligible, we suggest contacting your payroll provider or tax credit provider as soon as possible to file the amended payroll returns.
