Employee Retention Credit – Part of the CARES Act
What it does: compensates qualified employers for wages paid during the pandemic and/or cost of group health insurance. Note:
- Group health insurance costs are considered wages
- Wages paid with PPP loans are not considered qualified.
- Businesses with less than 500 employees can receive the credit for all employees.
- Anyone with a 20% or greater reduction in gross receipts
- Businesses started in 2019 or later can apply
- State colleges, universities and hospitals can apply.
How much compensation?
- For businesses with <500 employees, up to 70% per employee, capped at $28K per employee, per year.
- Businesses with 500> employees and less than a 90% reduction in gross receipts can qualify for partial credit.
- Businesses with 500> and a 90% or greater reduction in gross receipts can claim ERC for all wages paid.
- If the business was established after February 15th, 2020 and makes less than $1 million in gross receipts, the business could receive up to $200,000 total.
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