The Internal Revenue Service urges employers to take advantage of the newly extended employee retention credit, designed to make it easier for businesses to keep their employees on payroll.
The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted on December 27, 2020, made several changes to the employee retention tax credit previously made available under the Coronavirus aid, Relief and Economic Security Act (CARES Act), including modifying and extending the Employee Retention Credit (ERC), for six months through June 30, 2021.
As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar year, for a total of $14,000 in 2021.
For more information, please check with your accountant or tax professional.