Originally enacted in 2020 as a provision of the CARES Act, the Employee Retention Credit (ERC) is a refundable tax credit available to eligible employers who retained employees during the COVID-19 Pandemic, despite encountering economic hardship.
This could extend to full and or partially suspended business due to government orders, and or businesses that suffered a significant decline in gross receipts.
For tax year 2020, the credit can could be claimed against 50% of qualified wages, including some health insurance costs, paid up to $10,000 per employee annually.
In 2021, under the Consolidated Appropriations Act, the ERC was expanded and extended to offer taxpayers greater opportunity. For tax year 2021, eligible businesses can now claim a maximum amount of $7,000 per employee per quarter, or up to $28,000 annually. The eligibility requirements were also expanded to included businesses who took a Paycheck Protection Program (PPP) loan.
Eligible employers who missed out on this opportunity still have time to file for the credit via amended returns.
At TCG, we specialize in helping qualifying business take advantage of this federal tax incentive.