Through the excitement of companies receiving funds via the Payroll Protection Program there are also businesses that are not getting funding, or didn’t feel they were large enough to apply. There is another option – the Employee Retention Credit.
The Employee Retention Credit is available for wages paid from March 12, 2020 to December 31, 2020 for 50% of the qualifying wages up to a maximum credit of $5,000 per employee.
Eligible employers are those that have had their operations fully or partially suspended due to governmental authority, or have experienced a significant decline in gross receipts.
If the eligible employer averaged 100 or fewer full-time employees in 2019, qualifying wages are the wages paid to any employee during the period of economic hardship.
A significant decline in gross receipts is where gross receipts are less than 50% of gross receipts for the same calendar quarter in 2019. When gross receipts exceed 80% of the comparable quarter in 2019, the employer is no longer eligible as of the beginning of the next quarter.
The credit is taken on the quarterly Form 941 – Employer’s Quarterly Federal Tax Return beginning in the 2nd quarter of 2020. Please contact your payroll provider if you have not received funding from the Payroll Protection Program and you think this credit may apply to you.