If your company lost revenue because of COVID-19, you could receive up to $26,000 per employee back from the U.S. government as a tax credit. If your business had a reduction in gross receipts of at least 50% (2020) or 20% (2021) when comparing quarter to quarter of prior year, you may be eligible.
The ERC under the CARES Act gives employers a payroll tax credit for certain wages and health plan expenses paid while an employer is experiencing an economic hardship due to COVID-19. Eligibility for the employee retention credit was originally not available for PPP borrowers, but the CAA retroactively changed that so that wages not used for PPP loan forgiveness may still be used for the ERC. The CAA basically creates two separate versions of the ERC, one for 2020 and one for 2021. In 2020, it entitled employers to a credit worth 50% of the qualified wages of employees. But in 2021, this amount has been increased to 70%. The American Rescue Plan Act of 2021 extended and expanded the Employee Retention Credit (ERC) through December 31, 2021.
To repeat, you may qualify even if you received a PPP loan. CDS has prepared a white paper study to guide our members who would like to learn more about this program and possibly take advantage of the credit if it applies to their company. Click here.