Business Options for Financial Relief: Payroll Tax Credit
In addition to loans provided by the SBA, the IRS has its own program to support businesses in the wake of COVID-19.
What is it?
The IRS has created an Employee Retention 2020 Tax Credit that, for eligible businesses, could equal up to 50% of the wages paid to employees. Credit is given for the first $10,000 of salary, including health benefits, paid to each eligible employee. Applies to qualified employee wages paid after March 12, 2020, and before January 1, 2020.
Is my business eligible for this?
In order to be eligible, your business must meet one of the criteria below:
If your business has 100+ employees:
Your business shut down during the pandemic OR or your gross receipts have gone down by more than 50% compared to the same quarter last year.
If your business has under 101 employees:
Your business experiences a significant decline in gross receipts during the calendar quarter.
Which types of businesses are not eligible for this credit?
- “Self-employed individuals are not eligible for this credit for their self-employment services or earnings,” according to the IRS.
- Employers who receive Paycheck Protection Program Loans (PPP) are not eligible for this tax credit, according to the US Chamber of Commerce.
How do I apply?
To learn about how to take advantage of this tax credit, check out this guide to the Employee Retention Tax Credit or speak to a tax professional.
*Please note this information is for informational purposes only and is current as of April 7, 2020 based on our understanding of these programs. It can and likely will change — therefore please visit the source directly for the most updated and accurate information. Before making any financial decisions, please consult your lawyer, accountant, or financial advisor.