The IRS issued guidance for employers seeking to claim the employee retention credit under the CARES Act for calendar quarters in 2020. According to the IRS, this guidance includes clarifications and descriptions of the retroactive changes that primarily relate to an expanded eligibility for this credit. This notice provides answers to questions such as who are eligible employers, how much is the maximum amount of this credit, what are qualified wages, and more. Here are some of the highlights to the IRS tips on claiming the employee retention credit.
According to the IRS, the employee retention credit can be claimed by employers who paid eligible wages after March 12, 2020 and before January 1, 2021 and who experienced either a full or partial suspension of operations or a significant decline in their gross receipts. This includes eligible employers that received a Paycheck Protection Program (PPP) loan; however, the same wages cannot be counted in both for seeking forgiveness of the PPP loan and calculating the employee retention credit. This credit is equal to 50% of qualified wages, and the maximum credit available for each employee is $5,000 in 2020.
If you want more information on claiming the employee retention credit, please contact Lakeesha Browne, CPA.
“IRS Provides Guidance for Employers Claiming the Employee Retention Credit for 2020, Including Eligibility Rules for PPP Borrowers.” IRS, 1 Mar. 2021, https://www.irs.gov/newsroom/irs-provides-guidance-for-employers-claiming-the-employee-retention-credit-for-2020-including-eligibility-rules-for-ppp-borrowers Accessed 8 Mar. 2021.