What is Employee Retention Credit?
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Last modified 7/16/2020 4:44:11 AM EST
In March 2020, the US Government passed an Act, Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to reduce the impact of the economic downturn during this pandemic.
One such provision under this CARES Act is Employee Retention Credit. It is a refundable payroll tax credit against employment tax, which is 50% of the “Qualified Wages or $10,000” paid to retain employees from March 12, 2020, to December 31, 2020.
- As an employer, if you are partially or entirely affected by this pandemic and cannot run your operation.
- If you have a massive decline in your gross receipts, which is nearly below 50% in the same quarter of 2019, you are eligible to claim this credit.
If you’re an eligible employer, you can reduce the upcoming employment tax deposits to get this credit. If you are unable to cover this credit with the employer’s employment tax deposits, you can request an advance payment from the IRS. For advance credit, file Form 7200 at TaxBandits and transmit to the IRS.
To know more about the Employee Retention Credit, click here.