As a human resource professional in New York, you may be familiar with the Employee Retention Credit (ERC), a tax credit designed to help businesses keep their employees on payroll during the COVID-19 pandemic.
The ERC is a valuable resource for businesses that have been impacted by the pandemic and can help them keep their employees working, even if the business is not operating at full capacity.
Here is an overview of the Employee Retention Credit:
- Eligibility: To be eligible for the ERC, a business must have either fully or partially suspended operations due to a COVID-19 related shut-down order, or experienced a significant decline in gross receipts. Businesses that have received a Paycheck Protection Program (PPP) loan are also eligible for the ERC, as long as they have not received a credit for the same wages under the PPP.
- Amount of Credit: The ERC is worth 50% of the first $10,000 in wages paid to each employee during the year. This means that the maximum credit per employee is $5,000. Businesses can claim the credit for wages paid from March 13, 2020 to December 31, 2020.
- How to Claim the Credit: Businesses can claim the ERC by filling out Form 7200, Advance Payment of Employer Credits Due to COVID-19. If the business does not have sufficient tax liability to claim the full credit, the IRS will issue a refund for the remaining balance.
- Other Considerations: The ERC is available to both small and large businesses, and can be claimed in addition to the PPP loan forgiveness. However, businesses should be aware that they cannot claim the ERC for the same wages that have been credited under the PPP.
As a human resource professional, it is important to be aware of the Employee Retention Credit and how it can benefit your business. If your business has been impacted by the COVID-19 pandemic, the ERC can be a valuable resource for helping to keep your employees on payroll. Be sure to review the eligibility requirements and consider claiming the credit on your tax return.
