The Employee Retention Tax Credit (ERTC) is a federal tax credit available to employers who have been affected by the COVID-19 pandemic. The credit is designed to help employers retain their employees and cover certain expenses related to the pandemic. The credit is available for wages paid between March 13, 2020 and December 31, 2020.
The ERTC is a refundable tax credit that can be claimed against certain employment taxes. It is equal to 50% of qualified wages paid up to $10,000 per employee for the year. Qualified wages include wages paid to an employee who is not providing services due to the COVID-19 pandemic, or wages paid to an employee who is providing services but whose hours have been reduced due to the pandemic.
The ERTC is available to employers of all sizes, including those with fewer than 500 employees. Eligible employers can claim the credit for wages paid after March 12, 2020 and before January 1, 2021. Employers must also meet certain criteria in order to qualify for the credit.
The IRS has extended the deadline for employers to apply for the ERTC until December 31, 2021. This means that employers who have not yet applied for the credit can still do so before the end of the year. Employers should consult with their tax advisors to determine if they are eligible for the credit and how to apply.
In addition to the ERTC, employers may also be eligible for other tax credits and relief programs related to the COVID-19 pandemic. These include credits for paid sick leave and family leave, as well as credits for qualified health plan expenses. Employers should consult with their tax advisors to determine which credits and relief programs they may be eligible for.