The “CARES Act” provides a tax credit for eligible employers to encourage them to continue paying employees. The employee retention credit is available for employers that close or suspend operations or have much-reduced gross receipts due to the coronavirus pandemic. The benefit allows a fully refundable tax credit equal to 50 percent of qualified wages (including allocable qualified health plan expenses). The credit is determined quarterly and is capped at $5,000 per eligible employee. The credit applies to qualified wages paid between March 12, 2020 and January 1, 2021.
With respect to employers with 100 or fewer employees, all wages paid to an employee (whether or not an employee is able to provide services) during the period in which the employee is an eligible employer can constitute “qualified wages” for purposes of the Employee Retention Payroll Tax Credit. With respect to employers with greater than 100 employees, only wages paid to an employee during the period in which the employee is not providing services and the employer is an “eligible employer” can constitute “qualified wages” for purposes of the Employee Retention Payroll Tax Credit.
FAQs: Employee Retention Credit under the CARES Act
Please note, a Company is ineligible for the employee retention credit if the business takes out a PPP loan.
Contact us directly should you have any further questions. At this time, the majority of our staff are currently working from home, which means the best means for contact is via email. We continue to work hard to ensure your personal and business needs are met during these tumultuous times. Stay safe and healthy!
Walter & Shuffain, P.C.