Advocacy News – April 13, 2021
The Employee Retention Tax Credit is a key, business relief provision that was provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and modified by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
Employers should make sure they are receiving the maximum benefit of the credit by working with their accounting teams or CPA.
What happened:
Last week the Internal Revenue Service issued new guidance on the Employee Retention Credit discussing the following:
- The increase in the maximum credit amount,
- The expansion of the category of employers that may be eligible to claim the credit,
- Modifications to the gross receipts test,
- Revisions to the definition of qualified wages, and
- New restrictions on the ability of eligible employers to request an advance payment of the credit
Why it matters:
Simply put, the Employee Retention Credit will save you money!
Eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021.
Dig deeper:
- View the IRS’s notice HERE.
For more information regarding this issue, please contact Dan Papineau at dpapineau@michamber.com.