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The Covid-19 pandemic hit the streets, and businesses were forced to cease their business operations, Congress passed programs to offer financial aid to businesses. Click over here now of these programs was the credit for retention of employees (ERC).

The ERC offers eligible employers tax credits on wages and health insurance benefits to employees. The ERC program was ended by the Infrastructure Investment and Jobs Act that was enacted in November 2021.

Even after the expiration of the program, companies still can claim payroll tax in the past for up to 3 years retroactively. Here is a brief description of the program and the ways you can get credit for your business.

What exactly is the ERC?

The ERC was initially available beginning on March 13th, 2020, until December 31, 2020, the ERC is a refundable payroll tax credit, which was established as part of the CAR AR +2.4%ES Act. ERC was created to encourage employers to ensure that their employees are kept on payroll in the event of a pandemic.

Employers and borrowers who have taken out Paycheck Protection Program loans could receive up to 50% of their eligible wages, which could include the health insurance premiums that are eligible. The Consolidated Appropriations Act (CAA) extended the ERC. Employers who are qualified in 2021 can be eligible for credit of 70% of qualified wages

Who is eligible to apply for the ERC?

The eligibility criteria for the ERC depends on the time duration you’re applying for. To be eligible for 2020, you must to be a proprietor of a company or tax-exempt entity that was completely or in part closed due to Covid-19. It is also necessary to prove that you experienced a significant decrease in sales, less than 50% of comparable gross receipts when compared.

You must prove that your total receipts have decreased by at least 80% in the past year to be eligible for the 2021. If you were not in business in 2019, you may compare your gross receipts to 2020.

The CARES Act does prohibit self-employed individuals from claiming the ERC for their own wages. While you cannot claim wages for individuals who are related to you, you can claim credit for wages received by employees.