We hope that this post finds you well.
As we are sure you have figured by now, one of the the main goals of the CARES Act has been to help employers keep employees on payroll. While the focus lately has been on the PPP and EIDL programs, the CARES Act also created the Employee Retention Credit which provides a credit of 50% of qualified wages paid by employers during the pandemic.
Some of the key points of the Employee Retention Credit are:
Employers eligible to claim the credit are those who are or were in business during 2020 and either fully or partially suspended operations due to the COVID-19 pandemic or experience a "significant decline in gross receipts" during a calendar quarter.
A “significant decline in gross receipts” is defined as a 50% or greater drop in gross receipts in a 2020 calendar quarter as compared to the same calendar quarter in 2019.
The decline is considered to have ended when the employer’s quarterly 2020 gross receipts are greater than 80% of its gross receipts for the same 2019 calendar quarter.
The credit applies to qualified wages paid by an eligible employer after March 12, 2020, and before January 1, 2021.
Qualified wages include wages, compensation and qualified health plan expenses.
The maximum amount of credit-eligible qualified wages per employee is $10,000 (i.e. for all quarters, the maximum per employee credit is $5,000).
An eligible employer may not claim an Employee Retention Credit if the employer has received a paycheck protection loan.
Click here to view the FAQs issued by the IRS regarding the Employee Retention Credit.
Feel fee to contact us if you have any questions regarding the above or anything else.
Please stay safe and healthy!