Employee Retention Credit

The Employee Retention Credit (ERC) is a refundable payroll tax credit created by the CARES Act that provides businesses with financial relief in 2020 and 2021. It allows businesses to receive credits of up to $7,000 for each qualified employee for the first two quarters of the year, and up to $14,000 for the remainder of the year. The credit is designed to incentivize businesses to keep their employees on the payroll and help them avoid layoffs. To qualify, businesses must have been affected by government-mandated closures or have seen a significant decline in gross receipts as a result of the pandemic. The ERC can be used in combination with other government aid such as the Paycheck Protection Program (PPP).

The employee retention credit (ERC) is a benefit provided by the government to businesses affected by the pandemic. It helps businesses keep their employees on the payroll, and is available to those who have seen a reduction in gross receipts or have been forced to close due to governmental orders. Businesses that qualify for the ERC will only pay qualifying wages while the mandates are in effect, and they must show that they are having a more than nominal impact from the pandemic. Eligible businesses include those in the following industries: food services, hospitality, arts and entertainment, accommodations, retail, services, transportation, and tribal businesses. Qualifying wages include wages paid to employees for up to $10,000 of qualified wages per employee. The credit can be claimed for 50% of qualifying wages, up to a maximum credit of $5,000 per employee. Businesses can take advantage of the ERC by filing Form 941 quarterly. The Internal Revenue Service (IRS) also offers other relief options, such as deferring employment taxes, that may help businesses keep their employees on the payroll.