Employee Retention Credits
The Employee Retention Tax Credits (ERTC) created under the CARES Act are refundable payroll tax credits accessible to nonprofit organizations and are now significantly expanded. The 2020 credit applied to 50% of qualified wages, up to $10,000 in wages/year, and PPP recipients were previously ineligible to access the ERTC. The 2020 ERTC is now retroactively available to 2020 PPP recipients for certain wages not covered by PPP forgivable loans.
The 2021 credit is valued at 70% of qualified wages, up to $10,000 in wages/quarter per employee for the entire 2021 calendar year, amounting to up to $28,000 in refundable payroll tax credits per employee. Employers that receive Paycheck Protection Program loans or Shuttered Venue Operators Grants in 2021 will qualify for the expanded ERTC for wages that are not also covered by a forgivable PPP loan or an SVOG grant.
Complete guidance on the expanded ERTC is still awaited. In the meantime, the IRS has issued an initial overview, and the 2019 FAQs are a good starting point for becoming more familiar with this provision