New Benefits Available to More Employers with the Revised Employee Retention Credit
We wanted to pass along to you some news in the form of an expansion of the Employee Retention Credit with the signing of the Consolidated Appropriations Act of 2021 on 12/27/20.
Employers that carry on a trade or business that either were fully or partially suspended due to orders from the federal or state government limiting commerce due to COVID-19 or a business that experienced a significant decline in gross receipts during any quarter compared to the same quarter in 2019 could be eligible for the Employee Retention Credit.
Some key considerations:
New Employer Eligibility
The definition for a significant decline has now dropped to 20% for any quarter compared with same quarter in 2019. This used to be a 50% threshold in 2020.
New Qualified Wages Eligibility
Qualified wages now eligible are now extended to compensation paid to an employee(s) from January 1st – June 30th with up to 500 full-time employees. This threshold used to be 100.
New Maximum Credit per Employee
The new maximum credit is now $7,000 per employee per quarter, or 70% of quarterly qualified wages up to $10,000. This used to be $5,000 and up to 50% of quarterly wages.
Can Now Claim Even with PPP Loans
Retroactively back to March 13, 2020 businesses with PPP loans can claim the Employee Retention Credit for both 2020 and 2021 (however businesses cannot claim the ERC for wages used to obtain forgiveness on a PPP loan).
Credits Should be Claimed on Form 941 for the Applicable Quarter
As your trusted business advisors, we at Polk and Associates remain committed to assist you during this extraordinary time. Please reach out to us with questions you may have regarding the Employee Retention Credit as we stand with you as we weather this extraordinary crisis.
Large enough to serve a diverse clientele, yet small enough to maintain a hands-on approach, we are committed to maintaining the highest accounting and ethical standards with continuous education, extensive research resources, and excellent quality control.
Polk and Associates is a member of the Michigan Association of Certified Public Accountants, and the American Institute of Certified Public Accountants. The firm participates in the AICPA Peer Review Program, and has always received the highest level of award for its audit practice and quality control.
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