Understanding the 2021 Employee Retention Credit
The IRS has extended a COVID tax credit to employers who have kept workers on payroll throughout these turbulent times. The IRS urges employers to take advantages of the newly-extended Employee Retention Credit (ERC). The guidelines for the ERC were altered by the Taxpayer Certainty and Disaster Tax Relief Act of 2020, the credit is now extended through June 30, 2021.
The 2021 ERC will allow qualified employers to claim a refundable credit against the EMPLOYER share of Social Security for 70% of qualified wages (amended from 50% during 2020) paid starting 1/1/2021 thru 6/30/2021. An additional change for 2021 allows for businesses that received PPP loans to utilize the ERC.Under the 2020 legislation an employer was prohibited from utilizing the ERC if they had obtained a PPP loan.
We urge you to review the full IRS guidance regarding the employee retention credit on their site to determine your eligibility. You can also reference these Frequently Asked Questions.
Newtek Payroll is here to help you calculate your qualified wages and ensure your credit is requested and received. Please reach out to your dedicated customer support representative for further guidance.
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