The Employee Retention Credit (ERC), was enacted in March 2020 as part of the CARES Act and has since been modified twice by Congress to provide greater benefits to employers. Currently, eligible employers may claim a credit equal to 70 percent of the “qualified wages” paid to employees, up to a maximum credit of $7,000 per employee per quarter. If the credit exceeds amounts owed for payroll taxes the excess is fully refundable so it can generate cash for your business. (more…)
President Biden signed the $1.9 trillion American Rescue Plan Act of 2021 (ARPA) into law on March 11, 2021. Unlike previous stimulus legislation, ARPA provides some economic relief to both businesses and individuals but the main purpose was to provide funding for government agencies and social programs. We have compiled a summary of the tax related provisions below. We will keep you updated as we continue to analyze the Act’s impact on our clients. (more…)
In March 2021, the IRS issued Notice 2021-20 containing a series of FAQs to provide guidance for employers claiming the Employee Retention Credit for calendar quarters in 2020. In the guide below, are references to the FAQs addressing specific areas of the 2020 ERC. The Notice addresses only 2020 ERC rules as the IRS plans to release additional guidance for 2021 ERC soon.
A recently extended tax credit could make it easier for some businesses to expand their payrolls again after the COVID-19 pandemic. The Taxpayer Certainty and Disaster Tax Relief Act, part of the 2021 appropriations bill that was signed into law on December 27, 2020, includes a five-year extension of the Work Opportunity Tax Credit (WOTC).
The WOTC is designed to encourage businesses (and non-profit entities) to hire individuals from certain targeted groups that have traditionally faced employment barriers. After many companies were forced to reduce their workforces significantly in 2020, the number of people who could qualify for one of these groups has grown, especially those who qualify as recipients of long-term unemployment benefits. (more…)