CARES Act Allows Employee Retention Credit for Businesses Financially Impacted by Covid-19
Under the CARES Act, enacted March 27, 2020, the Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees.
The CARES Act allowed these credits for wages paid after March 12, 2020, and before January 1, 2021. See Notice 2021-20 PDF.
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), enacted December 27, 2020, amended and extended the employee retention credit (and the availability of certain advance payments of the tax credits) under the CARES Act for the first and second calendar quarters of 2021.
Was your business financially impacted by COVID-19? You could be elgibile for a employee retention credit against certain employement taxes.
Like the credit for 2020 under the CARES Act, you can get immediate access to the credit by reducing the employment tax deposits you are otherwise required to make. If your employment tax deposits are not sufficient to cover the credit, you may be able to request an advance payment from the IRS. See Notice 2021-23 PDF.
The ARP modified and extended the employee retention credit (and the availability of certain advance payments of the tax credits) for the third and fourth quarters of 2021. See Notice 2021-24 PDF for guidance on the ability to reduce deposits and, in some cases, request advances for the employee retention credit through December 31, 2021.