Employee Retention Tax Credit
The Employee Retention Tax Credit (ERTC) was created as part of the CARES Act to encourage businesses to continue paying employees by providing a credit to the eligible employer for wages paid to eligible employees. Recent changes allow for the ERTC to be utilized even by companies that received PPP loans.
Recipients of PPP loans are now eligible to qualify retroactively for the credit in 2020 and the first six months of 2021.
For 2020, the credit is computed at a rate of 50% of qualified wages paid up to a maximum of $10,000 of wages for the year resulting in a maximum credit of $5,000 per eligible employee.
An Eligible Employer (including all members of a control group) must either:
1. Have their operations fully or partially suspended due to orders from a governmental authority
2. Suffer a significant decline in quarterly gross revenue as measured against 2019
• 50% decline for 2020
• 20% decline for 2021
A governmental employer is not eligible.
For January 1st through June 30, 2021, the credit is computed at a rate of 70% of qualified wages paid up to $10,000 per quarter, resulting in a maximum credit of $7,000 per quarter per eligible employee.
Have questions about COVID-19 relief? Visit our COVID-19 Resource Center for more information.
Additional rules and limitations apply.