The IRS has issued its first guidance on the Employee Retention Credit.
- Employers receiving a PPP loan may NOT claim the credits.
- The employer’s business must be fully or partially suspended by government order due to COVID-19 during the quarter.
- Or, the employer’s gross receipts are below 50% of amounts in the same quarter of 2019. Once gross receipts go above 80% of the amounts in the comparable quarter of 2019, the employer is no longer eligible, after that quarter.
How much is the credit?
- 50% of wages paid, up to $10,000 per employee, total $5,000 per employee.
- For wages paid after March 12, 2020 and before January 1, 2021.
- Regardless of whether the employee works or not.
How to receive the credit?
- Immediately reduce federal payroll tax deposits.
- File Form 7200 to receive advance reimbursement.
- File Form 7200 at the end of the quarter to receive reimbursement.
For additional information see IRS FAQs