If your business has retained employees—or has recently brought staff back—your pandemic-impacted business should take advantage of the Employee Retention Tax Credit. The ERTC is like a grant because it reimburses the business for certain payroll taxes the business may have paid or is about to pay.
Businesses that experienced revenue loss of 50 percent or more are eligible to receive a tax credit against the employer share of Social Security tax equal to 70 percent of qualified wages they pay employees Jan. 1 through June 30, 2021. The tax credit can be claimed as a refund for taxes already paid or as a credit for taxes due on the first two calendar quarters of 2021.
The ERTC was rolled out in 2020 to help businesses that suffered substantial revenue loss during the pandemic. In 2021, the rules became more generous, allowing more than 5.2 million previously ineligible businesses to take advantage of the program. Among other 2021 changes, the maximum credit amount was increased and the category of employees whose wages qualify was expanded,
Need help understanding the criteria and applying? Several accounting firms have offered to do the work in exchange for a portion of the tax credit funds received. And these nonprofit organizations are helping businesses navigate the rules:
If you're not interested in help and you're ready to go it alone, Read the IRS bulletin that provides guidance pertaining to the first and second quarters of 2021.