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Employee Retention Tax Credits For Small Businesses: Here’s How To Claim Them!

Employee Retention Tax Credits
Employee Retention Tax Credits

Employee Retention Tax Credits help small businesses reduce their taxes and keep their employees satisfied. Reportedly, the tax credit equals to 50% of the wages paid to employees.

Small Businesses

Small Businesses

Employee Retention Tax Credits (ERC) intend to help small businesses reduce their taxes and keep their employees satisfied. ERC is a stimulus program for small businesses that were able to retain their employees amidst the COVID-19 pandemic. The tax credits equal to 50% of the qualified wages a business paid to its employees during the pandemic. The qualified wages are usually only up to $10,000 per employee every year.

According to Milkovich, to be able to claim the tax credits, small businesses have experienced at least a 50% decrease in gross receipts compared to the same quarter from the previous year. In addition, the small businesses must have also been forced to shut down due to closures mandated by the government. More importantly, small businesses can only claim the tax credits if they do not claim the Employee Retention Payroll Tax Credit (ERTC) as well.

READ ALSO: SNAP To Bring Back Pre-COVID-19 Pandemic Benefits In March

Employee Retention Payroll Tax Credit

An article in The Lake Law Firm states that the ERTC is a refundable payroll tax credit for businesses that have been shut down or had a decline in gross receipts due to the COVID-19 pandemic. The ERTC was launched as a part of the CARES Act. It intended to encourage businesses to continue paying their employees in exchange for the tax credits. The tax credit was available from March 13, 2020 until September 30, 2021.

READ ALSO: $600 Stimulus Checks For Farmers, Frontline Workers In February

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