MCC Construction Zone You May Be Still Able to Claim an Employee Retention Credit David E. Gibbs, CPA, CCIFP, CRE, CRE, MBA
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he Employee Retention Credit (ERC) was introduced in the CARES Act. Congress subsequently amended and expanded the tax credit to increase the number of companies that could qualify. Now most employers who have had a significant decline in business due to the pandemic qualify for the credit.
The credit was equal to 50% of up to $10,000 in wages paid between March 12, 2020, and January 1, 2021. The American Rescue Plan Act (ARPA) of 2021 increased the credit to 70% of qualified wages up to a $10,000 limit per quarter. Therefore $7,000 per employee per quarter for a total of $28,000 can potentially be claimed by qualified employers for the first three quarters of 2021. Employers can also claim up to $5,000 in ERC from 2020.
The potential ERC a company could take was reduced under the Infrastructure Investment and Jobs Act of 2021 to $21,000 per employee for Q4 of 2021. Startup recovery businesses, which include any company that began operations after February 15, 2020, and has average annual gross receipts of $1 million or less are eligible for the credit through the end of 2021. These businesses are subject to a quarterly ERC cap of $50,000. Employers can generally include certain federal income tax withholding, the employees' share of Social Security and Medicare taxes, and the employer's share of Social Security and Medicare taxes for all employees, up to the amount of the credit. Certain health insurance costs are also eligible. McCarthy.CPA
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