The Employee Retention Credit was established in the Coronavirus Aid, Relief and Economic Security Act. The credit is designed to encourage employers and to keep employees on the payroll for the affected months of 2020 by the coronavirus epidemic.
The employee retention credit is available for wage payments made from March 13, 2020 through December 31, 2020.
Employers with less than 100 full-time employees may be eligible for the credit. The credit covers all wages.
The law provides that businesses can claim a tax credit equaling 100% of the paid sick and family leave paid to employees.
The refundable tax credit can be 50% of wages paid by eligible employers whose business has been financially affected by COVID-19. If a construction firm meets the eligibility requirements, the credit can also be claimed on previously filed payroll taxes forms. ERC specialists in accounting departments and tax preparers are able to quickly assess whether a business is entitled to the credit. They can also provide any guidance. If they meet these criteria, the professionals can amend their payroll tax returns and submit them to IRS.
The credit is fully refundable because the Eligible Employer may get a refund if the amount of the credit is more than certain federal employment taxes the Eligible Employer owes. Consistent with its treatment as an overpayment, the excess will be applied to offset any remaining tax liability on the employment tax return and the amount of any remaining excess will be reflected as an overpayment on the return. The employer will receive a refund if the overpayment is not refunded as it was.