Employee Retention Credit

The Employee Retention Credit (ERC) was put into place in March of 2020 under the CARES act as a temporary response to the impacts of the Coronavirus.

This refundable tax credit was originally set to help companies keep employees on payroll. However, the ERC has since expanded its requirements for eligibility, increased the maximum credit per employee, and has allowed companies to use the ERC alongside the Paycheck Protection Programs (PPP).

Currently, the ERC is available for businesses through the 30th September, 2021, with a maximum credit of up to $5,000 per employee in 2020 and $7,000 per employee, per quarter in 2021.

For 2021, an employer is eligible for the ERC if:

  • The company carried on business or a trade during 2020, AND
  • Was either fully or partially suspended due to COVID-19 government orders, OR
  • Experienced a decrease in gross receipts of at least 20% compared to the same calendar quarter in 2019.
  • Employers with greater than 500 employees can only claim the credit on wages paid with no services provided.
  • Employers not in existence in 2019 can now claim the credit.

To claim the ERC, you can:

  • Gain immediate access to the credit by reducing employment tax deposits up to the amount of credit.
  • Report total qualified wages and related health insurance costs for each quarter on quarterly employment tax returns (Form 941). (Credit taken against employer’s Social Security tax. Excess is refundable.)

The ERC ended on September 30th, 2021.

Infographic depicting steps if a business is eligible for 2021 ERC

To learn more about the ERC and to see about your eligibility, contact CKH Group today! You can call us at 770-495-9077 or send us an email at info@ckhgroup.com. You can also book a free consultation here.

The above article only intends to provide general financial information and is based on open source facts, it is not designed to provide specific advice or recommendations for any individual. It does not give personal tax, financial, or other business and professional advice. Before taking any form of action, you should consult a financial professional who understands your particular situation. CKH Group will not be held liable for any harm / errors / claims arising from the articles. Whilst every effort has been taken to ensure the accuracy of the contents we will not be held accountable for any changes that are beyond our control.

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