CARES Act – Employee Retention Credits

The IRS has issued its first guidance on the Employee Retention Credit.

Who qualifies?

  • 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

https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

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