When companies shut down during the Covid-19 pandemic, Congress passed the Employee Retention Credit (ERC) to give financial aid to businesses and help them keep their employees on the payroll.
Although businesses today can no longer pay wages to claim the ERC, they still have until 2024 to check their payroll during the pandemic and claim the credit by filing an amended tax return.
What is the Employee Retention Credit?
The Employee Retention Credit is a fully refundable tax credit that can be used by qualified employers on certain employment taxes. It is a tax credit that helps businesses keep employees on the payroll.
Credits that can be claimed will depend on the year that an employer qualifies.
Who Qualifies for the Employee Retention Credit?
Various employers may qualify for the credit depending on the calendar you wish to apply for the ERC.
For 2020, one of two factors can qualify an employer:
A trade or business that fully or partially suspended business hours due to government authority limitations or (Based on the IRS guidance, some businesses do not meet these factors and therefore will not qualify.) or;
An employer experienced a significant decline in gross receipts
In 2021, eligibility rules have been updated and the ERC is even more generous.
To find out how you can claim the ERC, consult with a licensed professional for advice to get the best results that suit your situation.