More on Employee Retention Credit (ERC)

June 29th, 2021 at 6:51 AM

When Congress passed the CARES Act in March 2020, most businesses took advantage of the Paycheck Protection Program (PPP) loan; Congress also authorized a second option for employers--the ERC, a fully refundable credit against the business\'s payroll tax liabilities.

Initially, employers had to chose between these 2 options; however, due to the CARES act, employers can utilize both options!! Therefore, PPP loan recipients can now retroactively claim the 2020 ERC for wages not paid with the forgiven PPP loan proceeds.

If your business was suspended due to COVID-19 or the gross receipts for a calendar quarter are less than 50% of the gross receipts from the same quarter in the tax year 2019, you qualify.

The maximum creditable wages amount is $10,000 per employee for all quarters in tax year 2020, and the definition of wages includes the value of the health benefits paid on your employee\'s behalf.

It should also be noted the wages from the January 1, 2021 through June 20, 2021, can qualify for a more significant 2021 credit under another set of conditions.

Mark S. Fineberg, CPA