What it means for our clients.

Relief Is Here

Relief Is Here!

There is some fantastic news for businesses to start 2021! The Consolidated Appropriations Act of 2021 provides even more relief to employers than ever before. As part of the bill, the Employee Retention Credit has greatly expanded in value and availability to businesses in the U.S

The Employee Retention Credit was established as part of the CARES Act to benefit businesses that continue to pay their employees during the pandemic. This second Coronavirus relief bill greatly expands the value and availability of ERC for businesses in the U.S.

Beginning January 1, 2021

  • Creditable wage percentage is increased to 70% (previously 50%)
  • Credit wage-base is increased to $10,000 per quarter in qualified wages per employee (previously $10,000 per year).
  • Business eligibility – reduction in receipts now needs to reach 20% (previously 50%)
  • ERC now available to businesses that previously received PPP
Employee Retention Credit 2021

Offset your payroll tax and get cash back for credits above your payroll tax liability. This credit is refundable, meaning if you qualify for $50,000 in credit and only owe $8,000 in payroll taxes, you get a $42,000 cash refund.

Previously, the tax credit was equal to 50% of wages and compensation, up to $10,000 in wages for the year (2020). The new legislation extended the ERC and made Q1-Q2 2021 equal to 70% of wages and compensation, up to $20,000 in wages for the two quarters. This equals a max potential credit of $14,000 for Q1-Q2 2021 in addition to the 2020 credits.

There are no limitations on how you can spend the cash, and no arbitrary payroll benchmarks to establish.

Employee Retention Credit 2020

These are great programs, and a HIREtech’ian is available and on call to answer any questions you have when it comes to how the CARES Act and FFCRA impact your business.

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