How is the credit on IRS Form 7200 calculated?
838 views | Last modified 5/27/2020 6:53:11 AM EST

Applicable To
94X 1099 W-2 ACA W-4

The amount of the credit is 50% of the qualifying wages paid up to $10,000 in total and this is effective only for the wages paid between March 13th and December 31, 2020.

The definition of qualifying wages varies based on the number of employees an employer had in 2019. If the employees' count is less than 100 on average in 2019, then the credit is calculated based on wages paid to all employees. The employer will get the credit for the wages paid to employees whether they worked or not.

For example, if the employees worked for full time and all their wages are paid for full-time work, the employer will still get the credit for the wages paid. If the employees are greater than 100 on average in 2019, then the credit is granted only for wages paid to employees who did not work during the calendar quarter. Also, the wages taken into account are not limited to cash payments, but also includes a portion of the cost of employer-provided health care.

Qualifying businesses can File Form 7200 (Advance Payment of Employer Credits Due to COVID-19) to request an advance payment of the tax credits.

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