What has changed in 2021 with regard to the employee retention credit?
235 views | Last modified 4/24/2023 5:40:05 AM EST | Added by TaxBandits Team

The employee retention credit is available for qualified wages paid before January 1, 2022. For wages paid before July 1, 2021, the nonrefundable portion of the employee retention credit is against the employer's share of social security tax. However, for wages paid after June 30, 2021, the nonrefundable portion of the employee retention credit is against the employer's share of Medicare tax.

Generally, the rules for the employee retention credit for qualified wages paid before July 1, 2021, and qualified wages paid after June 30, 2021, are substantially similar. However, the following changes under the ARP begin July 1, 2021, and are applicable for qualified wages paid after June 30, 2021, and before January 1, 2022.

The ARP creates a new category of an eligible employer called a recovery startup business.
Qualified wages for the employee retention credit under section 3134 don't include wages taken into account for credits under sections 41, 45A, 45P, 45S, 51, 1396, 3131, and 3132.