Save Now with the Employee Retention Tax Credit
Despite the arrival of a vaccine, the COVID-19 pandemic continues to persist, forcing many businesses to endure under challenging conditions. A delicate balance needs to be maintained between complying with government orders, employee safety, and customer health concerns and the need to drive sales and realize a profit. Matters are made worse because news of COVID variants could continue to extend these issues.
The good news is that Congress passed a second COVID-19 relief bill in late December to provide immediate financial relief. One significant change was the extension and expansion of benefits offered through the Employee Retention Tax Credit (ERTC) for 2021.
What is the Employee Retention Tax Credit (ERC)?
The Employee Retention Tax Credit is a refundable payroll tax credit available to businesses and nonprofits. When launched as part of the CARES Act, it provided a $5,000 per employee per year credit for those with less than 100 employees experiencing either a forced shutdown or a 50% reduction in gross receipts. Unfortunately, Paycheck Protection Program (PPP) recipients were not able to participate.
The COVID-19 relief legislation has not only extended the ERC but has made several changes to expand eligibility, increase savings, and added a retroactive provision for PPP loan recipients. The ERC has been extended through June 30, 2021, increasing the per employee maximum per year to $14,000. It has also expanded eligibility to include those with a 20% reduction in gross receipts.
Start Saving Now
The new eligibility rules mean more businesses than ever qualify. Now is the time to take advantage of this generous tax credit.