Employers may be eligible for the Employee Retention Credit
(ERC), established by the Coronavirus Aid, Relief and Economic Security (CARES)
Act. The ERC provides up to $5,000 in credits for each employee retained during
a specified period of time.
To qualify for the credit, employers must meet two criteria:
1. Employers must have been in business prior to February
15, 2020, and either have full or partial operations suspended due to
governmental orders related to COVID-19 or experience a significant decline in
gross receipts during a calendar quarter compared with the same quarter in
2. Employers must retain employees through December 31, 2022
and not reduce payroll costs below 90% of what was paid from March 13, 2020 to
June 30, 2020.
Employers who meet the qualifications for the ERC can apply
during 2021 and 2022 for a credit worth up to 80% of qualified wages paid in
each quarter, with a maximum credit of $10,000 per employee per year. The
credit is available no matter how many employees are retained, but it cannot
exceed the total wages paid in a calendar quarter or $10,000 per employee over
the two-year period.
To apply for the credit, employers must complete Form 941-X
(Adjusted Employer’s Quarterly Federal Tax Return) and attach it to their
regular quarterly federal tax return. They will also need to provide
documentation such as payroll records, copies of required governmental orders,
and gross receipts records to the Internal Revenue Service (IRS).
The IRS has also established a portal for employers who may
qualify for the ERC. The portal will allow eligible employers to apply online
and receive their credits quickly without paperwork. Employers should consult
with a tax advisor or visit IRS.gov for more information on how to apply.
Employee retention credit 2022 can help businesses offset
the cost of salaries and wages for employees during this uncertain time.
Employers should take advantage of this opportunity if possible in order to
keep their employees employed and ensure business continuity during the
pandemic. By taking the necessary steps
to apply for the credit, businesses can continue to maintain operations while
protecting their most important asset—their employees.
We hope this guide has helped you understand the employee retention
credit 2022 and how to apply for it. Please feel free to contact us at EERTC
Wizard with any questions or for more information.
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