Employee Retention Credit (ERC)
The ERC is a refundable tax credit designed for businesses
Who continued paying employees while shut down due to the COVID-19 pandemic or who had significant declines in gross receipts from March 13, 2020, to Dec. 31, 2021.
Eligible taxpayers can claim the ERC on an original or amended employment tax return for a period within those dates. The Employee Retention Credit (ERC) is a tax credit created by the US government to provide financial assistance to eligible employers who were adversely affected by the COVID-19 pandemic. The ERC is designed to encourage employers to retain their employees during the economic downturn caused by the pandemic. The ERC is available to eligible employers who meet certain criteria, including a significant decline in gross receipts or a full or partial suspension of business operations due to COVID-19.
The credit is calculated based on a percentage of qualifying wages paid to eligible employees, up to a maximum amount per employee per quarter. Eligible employers can claim the ERC on their federal payroll tax returns, and the credit can be used to offset federal payroll tax deposits or applied for as a refund.
The ERC has undergone several changes since its inception in 2020, and it has been extended and expanded several times to provide additional relief to eligible employers. As of April 2023, the ERC is available for eligible wages paid through December 31, 2022.
