Apr 01, 2020 - 9:00am
Guide to the Employee Retention Tax Credit
For COVID-19 Impacted Employers
As part of an end-of-year pandemic relief package, Congress made several changes to the Employee Retention Tax Credit program. Here’s everything you need to know now:
Prior to 2021, the employee retention tax credit applied only to an employer who experienced a decline in gross receipts of more than 50% in a quarter compared to the same quarter in 2019. For 2021, eligibility is now expanded to include employers who experienced a decline of more than 20%.
Private employers, including non-profits, carrying on a trade or business in 2020 that:
With respect to tax-exempt organizations under 501(c) of the tax code, the requirement to be partially or fully suspended applies to all operations of the organization.
Employers who receive a Paycheck Protection Program (PPP) loan are eligible for a tax credit. To learn more about PPP loans, visit uschamber.com/sbloans.
This new employee retention tax credit is a 50% tax credit for the first $10,000 of compensation, including the employer portion of health benefits, for each eligible employee.
The refundable credit is applied against the employer portion of payroll taxes. The Treasury Department will develop a process for employers to receive an advance payment of the tax credit.
The Internal Revenue Service will issue further guidance and manage the ERTC process. Please contact the IRS with specific questions.
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