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All You Need to Know About Employee Retention Credit


What is employee retention credit?

The Employee Retention Credit is a fully refundable tax credit for employers equal to 50% of qualified wages paid to eligible employers, including allocable qualified health plan expenses.

Who is an eligible employer for the employee retention credit?

Employers who carry on a trade or business during the calendar year 2020 are eligible for the Employee Retention Credit.

How to determine when a business’ operation should be suspended for the employee retention credit?

The operation of a trade or business is partially suspended if an appropriate governmental authority enforces limitations on the employer’s operations due to COVID-19, such as limiting business or group meetings, such that the employer can continue some, but not all, of its standard operations.

How to determine the maximum amount available to eligible employers in the employee retention credit?

For all calendar quarters, the maximum amount of qualified wages taken into account for each employee is $10,000, so the maximum credit for qualified wages paid to any employee is $5,000.

What are qualified wages and qualified health plan expenses?

Qualified wages are those paid by an eligible employer to employees between March 12, 2020, and January 1, 2021. Qualified health plan expenses are amounts incurred or paid by an eligible employer to provide a group health plan.

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