Employee Retention Credit
Employee retention credit is a tax benefit offered to employers who retain their employees after they have been employed for at least six months. ERC is based on the amount of money paid to each employee over the course of the year. Originally available from March 13, 2020, through December 31, 2020, the ERC is a refundable payroll tax credit created as part of the CARES Act. The purpose of the ERC was to encourage employers to keep their employees on payroll during the pandemic.
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What exactly is the ERC?
When the Covid-19 virus started, and organizations all over were told to discontinue operations, Congress approved programs to offer financial assistance. One of these programs goes by the name employee retention credit (ERC). The ERC gives qualified employers payroll tax credits for health insurance and wages paid to employees.
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Am I eligible for the ERC?
Determining eligibility depends on the period you’re applying for. For example: to be eligible for 2020, a business (or tax-exempt organization) would have had to have been partially, or fully shut down strictly due to Covid-19. Furthermore, showing that the business experienced a significant decline in sales (more specifically; less than 50% of comparable gross receipts compared to 2019) is required.
