The Employee Retention Tax Credit (ERTC), a provision of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, encourages companies to maintain their workforce by providing eligible businesses with a fully refundable tax credit on qualified employee wages.
The Consolidated Appropriations Act of 2021 (CAA), which was signed into law in December 2020, provides businesses with additional relief by extending the ERTC through June 30, 2021. The ERTC originally provided a 50 percent tax credit on qualified wages of up to $10,000 per employee for 2020, or a maximum credit of $5,000 per eligible employee. Under the CAA, however, the ERTC credit has increased to 70 percent and the credit is allowed for each employee per quarter. If all eligibility requirements are met, businesses may claim a total of $14,000 credit per employee for the first two quarters of 2021.
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