Most of us have heard of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which came with an over $2 trillion price tag and included provisions for economic impact payments (aka stimulus checks) for individuals, assistance for state and local governments, and Paycheck Protection Program (PPP) loan options for small businesses. What not everyone knows is that there were other provisions in the CARES Act, as well, one of which is the Employee Retention Tax Credit.
The Employee Retention Tax Credit was put into place as an incentive for employers to keep employees on staff as the economy retracts, even if there isn’t as much revenue coming in as before.
Not all employers will be able to take advantage of the PPP; the funds ran out before all of the qualified employers could get approved, and not all employers qualify. For those employers that do not take out a loan under the PPP, they may be eligible for this credit.
According to the Internal Revenue Service (IRS) website:
“The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.”
The key takeaways for employers about this act are:
- An employer cannot take advantage of both the PPP loan and this credit. This credit is only available for an employer that did not get a PPP loan…
Source: HR Daily Advisor