What is the Employee Retention Credit?
The Employee Retention Credit (ERC) was enacted in the Coronavirus Aid, Relief and Economic Security (CARES) Act in March of 2020 to encourage employers to retain employees during the pandemic. If eligible, the credit is capped at $5,000 for all qualified wages paid between March 13, 2020 to December 31, 2020 (the credit amount allowed for the $10,000 in qualified wages x 50% credit rate.) The credit cap in 2021 increased to $7,000 per quarter for qualified wages paid between January 1, 2021, and September 31, 2021 (the credit for $10,000 in qualified wages x 70%).
On Monday, November 15th, 2021, President Biden signed into law the bipartisan Infrastructure Bill. The $1.2 trillion bill included a few tax provisions in the legislation, one significant change being the earlier end date for the ERC. The ERC was previously set to last until the end of the 2021 calendar year but has now been terminated at the end of the third quarter of 2021 (September 30, 2021).
Many businesses have yet to claim the employee retention credit due to a lack of eligibility awareness. Big dollars are being missed, but it’s not too late. You could be missing out on a substantial amount of credit, as much as $26,000/employee.
If you are interested in seeing if your business is eligible for the Employee Retention Credit and incorporating it into your tax strategy, fill out the form below.