Employee Retention Tax Credit

Employee Retention Credit Offers Savings Opportunity

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 Tax Credit (ERTC) is a federal tax incentive program designed to reward eligible companies for retaining employees during the pandemic. It helps eligible businesses retain employees by offering a percentage-based credit on qualified wages paid to employees. The credit is refundable and can be claimed on quarterly employment tax returns. Eligibility criteria and credit amounts have evolved with changing legislation but generally there are different rules governign the credit in 2020 and 2021.

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 $21,000 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.

Let’s Get Started

Unlike other tax credits it is not necessary to wait until the end to save. The time to act is NOW! 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.