The employee retention credit (ERC) helps employers retain their employees and offset the cost of providing health care benefits during these difficult economic times. The ERC is a refundable tax credit against certain employment taxes equal to 50% of qualified wages paid from March 13, 2020 through December 31, 2020. Qualified wages are limited to $10,000 for each employee for all calendar quarters.
Eligible employers can claim the ERC on Form 941 when filing
their quarterly employment tax returns. Employers must have experienced either:
• A full or partial suspension of operations due to an order from an appropriate governmental authority limiting commerce, travel or group meetings due to COVID-19; or
• A significant decline in gross receipts compared to the
same quarter in the prior year.
To be eligible for the ERC, employers must claim an employer portion of Social Security tax on wages paid after March 12, 2020 and before January 1, 2021. The credit is available for both for-profit organizations and certain non-profit organizations.
To apply for the ERC benefit, employers should consult a
qualified tax advisor or CPA. Employers can also visit the ERTC Wizard website for more
information on how to qualify and apply for this important tax benefit. With the ERC providing much needed support to
businesses that have been affected by COVID-19, employers should take full
advantage of this valuable credit when filing their employment taxes.
Taking advantage of the employee retention
credit is a great way for employers to ensure that workers remain with their
company during these difficult times. It can also help employers offset some of
the costs associated with providing health care benefits to employees and keep
them safe and healthy. Employers should speak to a qualified tax advisor or CPA
if they are unsure about how to go about applying for this important tax
benefit.