Refundable tax credit - employee retention credit

IRS recently announced a new tax credit, it is called employee retention credit. The employee retention credit is designed to encourage employers to keep employees on their payroll. The refundable tax credit is 50% of up to $10000 in qualified wages paid to an employee by eligible employer experiencing economic hardship related to COVID-19. This credit is for wages paid from 03/13/2020 through 12/31/2020.

Business that receive a Small Business Interruption Loan under PPP program are not eligible.

Eligible employers must meet one of below two criteria.

1. Business is fully or partially suspended by government order due to COVID -19 during the calendar quarter.

2. Business has significant decline in gross receipts. This begins with the first quarter in 2020 when business’s gross receipts are below 50% of the same quarter in 2019.

Contact JWCPA if you have any questions. Thank you.