Unlocking the Benefits of the Employee Retention Credit

The Employee Retention Credit (ERC) is a federal tax credit introduced to support employers in retaining their workforce during the COVID-19 pandemic. Unlike a loan, the ERC is a refundable credit that does not need to be repaid. Initially available for tax years 2020 and 2021, the ERC aims to help businesses recover from the economic shutdown in 2020 and make up for lost revenue caused by the pandemic.

In 2020, the ERC allowed employers to claim 50% of up to $10,000 in wages paid per employee, resulting in a maximum credit of $5,000 per employee. The credit expanded in 2021, allowing businesses to claim 70% of up to $10,000 in wages per employee per quarter, totaling $7000 per employee for the year. Various industries such as nonprofits, colleges, universities, hospitality, retail, industrial, real estate, construction, and technology may qualify. Additionally, businesses that faced government-imposed suspensions, supply chain disruptions, reduced operations, or workforce limitations due to COVID-19 may be eligible.

Navigating the ERC process can be intricate, but there are specialized services available to assist businesses. For instance, Credit League offers expert assistance such as consultations, documentation preparation, and comprehensive ERC filing services. It is important to note that processing ERC claims by the IRS and issuing checks typically takes an average of 4 to 10 months.

What Is Employee Retention Credit?
Adam Hansen
 

Adam is a part time journalist, entrepreneur, investor and father.