The Employee Retention Credit is a valuable incentive provided by the government to encourage employers to retain their employees during challenging economic times, such as the COVID-19 pandemic. is a tax credit established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. Its primary purpose is to support businesses and alleviate the financial strain caused by the pandemic. This credit was designed to aid eligible employers who continued to pay their employees, whether they were working or not, during periods of economic disruption.

Eligibility Criteria

To take advantage of the Employee Retention Credit, businesses must meet specific eligibility criteria. Here are some key factors to consider:

1. Business Operations: Your business must have been operational during the period for which you are claiming the credit.
2. Partial or Full Suspension: The credit is applicable if your business experienced either a partial or full suspension of operations due to government orders or a significant decline in gross receipts.
3. Employee Count: The credit applies to employers of all sizes, including those with fewer than 500 employees.

Calculating the Credit

The Employee Retention Credit amount is determined based on the wages paid to eligible employees during the qualifying period. The credit covers up to 70% of qualified wages, with a maximum of $10,000 per employee per quarter. This means that businesses can claim a credit of up to $7,000 per employee per quarter.

Interaction with Other Relief Provisions

It is essential to understand how the Employee Retention Credit interacts with other relief provisions to maximize your benefits. Some key points to consider are:

1. PPP Loans: If your business received a Paycheck Protection Program (PPP) loan, you may still qualify for the Employee Retention Credit. However, the same wages cannot be used for both benefits.
2. Family First Coronavirus Response Act (FFCRA): Wages claimed under FFCRA are not eligible for the ERC.

Benefits of Employee Retention Credit

The Employee Retention Credit can be a game-changer for businesses facing financial challenges. By taking advantage of this credit, employers can:

1. Financial Relief: The credit provides substantial financial relief, allowing businesses to allocate funds to critical operations and support their workforce.
2. Employee Retention: By receiving financial assistance, businesses can retain their employees, fostering a sense of security and loyalty among the workforce.
3. Business Sustainability: The Employee Retention Credit can contribute to the overall sustainability and continuity of businesses, especially during economic downturns.

Final Thoughts

In conclusion, the Employee Retention Credit is a powerful tool that can benefit businesses significantly, particularly during times of economic uncertainty. By understanding the eligibility criteria, calculating the credit accurately, and claiming it appropriately, businesses can access valuable financial relief and retain their valuable workforce.

About OnPoint ERC

The Employee Retention Credit (ERC) is a payroll tax refund. It was passed by Congress via the CARES Act to provide financial support to businesses that held-on-tight and fought-like-hell during the early years of Covid-19. The credit is designed to encourage employers to retain their employees on payroll rather than implementing layoffs or furloughs. OnPoint ERC helps employees with their ERC refund process. OnPoint ERC team of experts prepares the required IRS documentation and provides white-glove service to file with comfort and security. Check your ERC tax credit eligibility on onpointerc.com today!