In the midst of the COVID-19 pandemic, many businesses are facing financial difficulties and struggling to retain their employees. To help ease the burden, the government has introduced the Employee Retention Credit (“ERC”), a tax credit for employers who have faced significant reductions in their business due to the pandemic. This credit can be a lifeline for businesses, as it provides financial relief to help cover the cost of retaining employees during these tough times.
What is the Employee Retention Credit?
ERC is a refundable tax credit that is available to employers who have faced significant reductions in their business during the COVID-19 pandemic. It provides a credit of up to a maximum of $26,000 per employee for tax years 2020 and 2021. This credit can be used to offset the employer’s portion of federal employment taxes such as federal income tax withholding, medicare, and employer FICA.
Eligibility for the Employee Retention Credit
To be eligible for the ERC, an employer must meet certain requirements. First, the employer must have had to fully or partially suspend operations due to a government order related to COVID-19, or have experienced a significant decline in gross receipts. Second, the employer must have either paid qualified wages to employees or maintained its workforce. If these requirements are met, the employer is potentially eligible for ERC.
How to Claim the Employee Retention Credit
Claiming ERC is is done on a company’s 941-X. The credit can be claimed for each quarter in which the employer meets the eligibility requirements, and the credit will be applied against the employer’s portion of Social Security taxes.
Talk to KC&A About ERC
It is comforting to witness an increase in opportunities for business owners to find solace amid the aftermath of the pandemic. However, the regulations governing these programs can be intricate.
That is why it holds great importance to collaborate with a reliable and professional team such as KC&A, which can assist you in navigating the application processes and ensure the implementation of a strategy that allows you to maximize the utility of your funds.
At KC&A, we have established a dedicated team specializing in ERC, focusing solely on aiding businesses like yours in navigating these government programs and utilizing the funds to fortify their financial standing. Additionally, we possess extensive industry-specific expertise in assisting companies of all sizes that prioritize growth.
Our experienced team at KC&A has a proven track record of obtaining federal and state tax credits based on legislative developments like ERC. Feel free to reach out to us and discover if we can assist your small business in offsetting payroll taxes by thousands of dollars per year through ERC.
Contact KC&A Today for your free ERC assessment and evaluation
