The latest data shows that employment is still down by roughly 3.6 million jobs despite the efforts that the government has gone through to provide businesses with financial assistance. Your clients may be eligible for the Employee Retention Credit (ERC) to help them keep their team together as we fight to pull through the COVID-19 pandemic.
The ERC provides up to $5,000 per employee during 2020 and up to $7,000 per employee per quarter for the first three quarters during 2021. That’s up to $26,000 per employee for qualifying businesses!
What is the Employee Retention Credit (ERC)?
As defined by the IRS, the ERC is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays their employees. It is designed to encourage businesses to retain employees during the Covid-19 pandemic. Also commonly referred to as the ERC Tax Credit, Employee Retention Tax Credit, ERTC 2021, or ERTC, this credit is available through December 31, 2021.
If your client is an eligible employer, then they can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. In addition, if the employer’s employment tax deposits aren’t sufficient to cover the credit, they can receive an advance payment from the IRS. To capture the credit for prior quarters, an amended 941 must be filed.