Eligible employers can claim the credit, a refundable tax credit which is equal to 50 percent of up to $10,000 in qualified wages (including health plan expenses), paid after March 12, 2020 and before January 1, 2021.
Operations that have been partially or fully suspended due to governmental orders due to COVID-19, or
businesses that have a significant decline in gross receipts compared to 2019.
The refundable credit is capped at $5,000 per employee and applies against certain employment taxes on wages paid to all employees.
Eligible employers can reduce federal employment tax deposits in anticipation of the credit.
They can also request an advance of the employee retention credit for any amounts not covered by the reduction in deposits.
The advanced payments will be issued by paper check to employers.
- IR-2020-57, Treasury, IRS and Labor announce plan to implement coronavirus-related paid leave for workers and tax credits for small and midsize businesses to swiftly recover the cost of providing coronavirus-related leave
- IR-2020-62, IRS: Employee Retention Credit available for many businesses financially impacted by COVID-19
Frequently Asked Questions:
- Deferral of employment tax deposits and payments through December 31, 2020
- COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs
- DOL Families First Coronavirus Response Act: Questions and Answers
- FAQs: Employee Retention Credit under the CARES Act