Employee Retention Tax Credit

2021 Employee Retention Credit Offers New Savings Opportunity

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The COVID-19 Relief Bill (Consolidated Appropriations Act, 2021) signed into law in late December 2020 provides an immediate tax savings opportunity for many Pennsylvania businesses and nonprofit organizations. Many are unaware of the credit’s expanded scope and more generous credit amounts. New for 2021, taxpayers can apply for a credit against expected payroll taxes for the first and second quarter of the year. The result is an immediate opportunity for those who qualify.

What is the Employee Retention Credit (ERC)?

The Employee Retention Credit is a refundable payroll tax credit available to businesses and nonprofits. When launched as part of the CARES Act, it provided a $5,000 per employee, per year credit for those with less than 100 employees experiencing either a forced shutdown or 50% reduction in gross receipts. Unfortunately, Paycheck Protection Program (PPP) recipients could not participate.

What Changed in 2021?

The COVID-19 relief legislation has not only extended the ERC but has made several changes to expand eligibility, increase savings, and even added a retroactive provision for PPP loan recipients. The ERC has been extended through December 31, 2021, increasing the per employee maximum, per year to $14,000 and expanded eligibility to include those with only a 20% reduction in gross receipts. Finally, small businesses can also receive a credit advance against future payroll taxes.

Uncover the Savings Now

Unlike other tax credits it is not necessary to wait until the end to save. The time to act is NOW! In a recent webinar Mark Heath, Partner and Director of Tax Services discussed the details of the ERC, how to calculate the determination of qualification and the quarters that would apply to your business.

The team at McKonly & Asbury stands ready to review your business, determine eligibility, and the amount of potential savings. Through our ERC study, we will make the necessary calculations, compile required documentation, prepare all filings, and submit to the IRS. Since you can claim the credit at any time, there is no reason to wait to get started.

If you have questions or would like to get the analysis started, complete the form below and a team member will reach out shortly.