The Employee Retention Credit (ERC) is a tax credit that was introduced by the US government as part of its COVID-19 relief measures. It is designed to encourage employers to retain their employees during the pandemic by offering a tax credit for a percentage of the wages paid to those employees.
The ERC was initially available for wages paid between March 13, 2020, and December 31, 2020. However, it has since been extended. To be eligible for the ERC, an employer must have experienced either a significant decline in gross receipts or a full or partial suspension of their business operations due to COVID-19, this can mean different things for different businesses. Employers with 500 or fewer full-time employees are eligible for the credit, regardless of whether they were open or closed during the pandemic.
The credit is worth up to 70% of qualified wages paid to employees, up to a maximum of $10,000 per employee per quarter. This means that an employer can claim a maximum credit of $7,000 per employee per quarter. The ERC can be claimed on the employer’s quarterly payroll tax returns, and any excess credit can be refunded to the employer or applied to future payroll taxes. The credit is fully refundable, which means that even if the credit exceeds the employer’s payroll tax liability, the excess credit will be refunded to the employer.
The ERC is a valuable tool for employers who are struggling to retain their employees during the pandemic. By offering a tax credit for a portion of the wages paid to employees, the ERC can help to offset the cost of retaining staff and encourage employers to maintain their workforce.
We are proud to provide our partners 2 opportunities to learn more about the ERC from Bob Phillips with Improving your Success. Our Power Hour Training for Small Business on June 6th, 2023 at 11am at the Chamber office or our virtual meeting on June 13th at 11am. Make sure to sign up for one today!
