What is the Employee Retention Credit?

Employee Retention Credit - Assisting economically impacted companies to keep employees on the payroll.

The CARES Act introduced the latest ERC to encourage companies to maintain their payroll. This ERC is a refundable credit that businesses can claim on qualified wages paid to employees during 2020 and 2021.

The ERC provides a refundable employment tax credit, up to $5,000 per employee for 2020 and up to $28,000 per employee for 2021.

In 2020, it entitled employers to a 50% credit (maximum of $5,000 per employee) of the qualified wages paid to employees. This amount increased to 70% (maximum of $7,000 per employee, per quarter) for 2021 with the American Rescue Plan Act (ARPA).

Under the recently enacted?American Rescue Plan Act?(ARPA – Mar.2021) and previously under the Consolidated Appropriations Act, 2021, the employee retention credit, a provision of the CARES Act, is extended and expanded. It can be claimed through Dec. 31, 2021 to eligible employers who retained employees.

Am I eligible for the Employee Retention Tax Credit?

Many employers, including not-for-profits, qualify for the ERC.??Eligibility is determined on a quarter-by-quarter basis.?To be eligible the employer has to show they either:

• Suspended operations fully or partially due to an official COVID-19-related shut down order

OR

• Experienced a significant decline in gross receipts relative to the same quarter of 2019 (for 2021, the significant decline in gross receipts can also be measured by comparison to the prior calendar quarter)

For 2020 and 2021 Employers that received a Paycheck Protection Program (“PPP”) loan may still be able to claim the ERC. (the two benefits cannot be related to the same wages)

What is the Tax Credit Amount?

For 2020?you can receive a credit equal to?50%?of the first $10,000 of Qualified Wages paid per employee in the?aggregate for all eligible quarters. The maximum ERC for all of 2020 is $5,000 per employee.

For 2021, you can receive?70%?of the first $10,000 of Qualified Wages paid per employee in?each quarter. The maximum ERC for each quarter is $7,000 per employee. The maximum ERC for 2021 is $28,000 per employee.

There have been recent proposals to terminate ERC for Q4 of 2021.?It may or may not happen depending on what gets finalized.?There are still opportunities for companies to benefit.?If you have any questions regarding ERC or would like to discuss whether you qualify, you can reach out to me directly.