For many businesses, you are scouring the internet for all of the available resources you can access to help you get through this pandemic. Most of the media and business attention has been focused on the Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) of the SBA - and the frustrations in applying, getting an SBA lender and getting cash out of these programs.
This post will examine some of the tax credits that are unlocked in the the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES act created a new employee retention tax credit for employers who are closed, partially closed, or experiencing significant revenue losses as a result of COVID-19.
The analysis inserted below is from the US Chamber of Commerce . Continue reading this blog post below the insert for eligibility requirements and guidance on the program.
Who is eligible? Private employers, including non-profits, carrying on a trade or business in 2020 that:
With respect to tax-exempt organizations under 501(c) of the tax code, the requirement to be partially or fully suspended applies to all operations of the organization.
Employers who receive a Paycheck Protection Program (PPP) loan are not eligible for a tax credit. To learn more about PPP loans, visit uschamber.com/sbloans.
How much is the tax credit?
This new employee retention tax credit is a 50% tax credit for the first $10,000 of compensation, including the employer portion of health benefits, for each eligible employee.
Compensation does not include paid sick or family leave for which the employer is reimbursed under the Families First Coronavirus Response Act
The credit only applies to wages paid after March 12, 2020 and before January 1, 2021
Which employees count toward eligibility?
For employers with more than 100 employees:
Employers may not claim the same employee for this credit and the Work Opportunity Tax Credit for the same period. In addition, employers may not claim the same wages for an employee under this credit and also under the employer credit in section 45S for FMLA
How is the credit paid?
The refundable credit is applied against the employer portion of payroll taxes. The Treasury Department will develop a process for employers to receive an advance payment of the tax credit.
The Internal Revenue Service will issue further guidance and mange the ERTC process. Please contact the IRS with specific questions.