EARNINGS DISCLOSURE: We earn commissions from this service.
The Employee Retention Tax Credit (ERTC) is a tax credit provided by the US government to help eligible employers retain their employees during the COVID-19 pandemic.
The ERTC was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, and it has since been extended and expanded under subsequent legislation.
The ERTC is available to eligible employers who have experienced a significant decline in gross receipts or who have been forced to fully or partially suspend their operations due to government orders related to the COVID-19 pandemic.
Eligible employers can claim a tax credit equal to 70% of up to $10,000 in qualified wages per employee per quarter. The credit is taken against the employer's share of Social Security taxes and any excess is refundable.
To be eligible for the credit, employers must have had an average of 500 or fewer full-time employees in 2019. Larger employers may also be eligible for the credit, but only for wages paid to employees who are not providing services due to the COVID-19 pandemic.
The ERTC can be a valuable tool for eligible employers to help retain their employees during the pandemic, and it may provide some relief from the financial impacts of the pandemic on their businesses. Employers should consult with their tax advisors to determine if they are eligible for the credit and how to claim it.