The CARES Act introduced the Employee Retention Credit (ERC) in March 2020 as an incentive for firms to maintain their workforce intact amid the COVID-19 pandemic. The new American Rescue Plan Act (ARPA) has enlarged eligibility and prolonged the credit, which is now worth up to $28,000 per employee until 2021. As a result, what was once an attractive incentive has evolved into a "can't miss" chance for increased cash flow for qualifying enterprises. However, many companies still doubt its potential, so it is worth glancing at the ERC benefits again.
Therefore, this blog will familiarize you with the ERC benefits. So, without wasting any time, let's dive deep into it.
ERC Benefits
The Employee Retention Tax Credit allows businesses to claim a 70% tax credit of up to $10,000 of an eligible employee's income per quarter in 2021. For each employee, the maximum credit for each quarter is roughly $7,000 every quarter.
The refundable credit in 2020 was a 50% tax credit of up to $5,000 of an employee's annual pay. In summary, this tax credit may save you substantial business money in taxes.
The ERC reduces your Social Security tax liability.
The ERC reduces an employer's Social Security tax obligation. How does this function?
If the ERC credit you get exceeds your Social Security tax due, you are eligible for a refund. The amount of these credits is reconciled on the employer's Form 941 at the conclusion of the quarter.
The Tax Credit is available to a Wide Range of Industries.
One of the most attractive benefits of the Employee Retention Tax Credit is this. The IRS has established criteria for assessing whether enterprises in certain industries qualify. These include tax-exempt organizations, private-sector organizations, and nonprofit organizations.
Colleges and institutions, for example, may be qualified for the credit. Finally, healthcare-related firms may be eligible for tax breaks. You need to check with your ERC specialist to know whether your organization qualifies, as it may be difficult to check on your own.
You Can Claim ERC for a Large Number of Employees.
Employers of varied sizes can claim payroll tax relief for varying numbers of employees. A small business, for example, can claim ERC on the salary of all its employees. Further, a small employer is defined as one who employs 100 or fewer people under the CARES Act.
If your company has over 100 employees, you can calculate and claim an Employee Retention Tax Credit on some of them. But, those employees must come under the "not working" category.
What does this entail? Unfortunately, this might take numerous forms. A professional adviser should be consulted to gain the finest grasp of the entire operation. If you want to get a hassle-free ERC claim, make an ERC call to ERC specialists by visiting the website of Claimer Ccredit. They provide the best service as they do not let you burn your fingers and also let you know the status of your file.