The Employee Retention Tax Credit (ERTC) is a tax credit offered by the United States government to encourage employers to keep their employees on payroll during the COVID-19 pandemic.
The ERTC was initially introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 and has been extended and expanded several times since then.
The ERTC allows eligible employers to claim a refundable tax credit equal to 70% of the qualified wages they pay to employees, up to a maximum of $10,000 in qualified wages per employee per quarter.
To be eligible for the ERTC, employers must meet certain criteria, including experiencing a significant decline in gross receipts or being subject to a full or partial suspension of business operations due to COVID-19.
Employers can claim the ERTC on their quarterly employment tax returns or can request an advance payment of the credit from the IRS. Employers should consult with their tax advisors to determine their eligibility for the ERTC and to ensure compliance with the requirements of the program.