Last Chance for Savings: employee retention credit Deadline Approaching
As the economic impact of the COVID-19 pandemic continues to be felt across the globe, businesses have been forced to make difficult decisions, including laying off employees or shutting down entirely. However, for those companies still standing and trying to weather the storm, there is a glimmer of hope, in the form of the employee retention credit (ERC).
The employee retention credit is a refundable tax credit that was introduced as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The purpose of this credit is to encourage businesses to keep their employees on the payroll during these challenging times.
Many businesses may already be aware of the employee retention credit and have taken advantage of it. However, what they might not be aware of is that the deadline to claim this credit is fast approaching. For those who haven’t yet utilized this opportunity, now is the time to act.
The deadline to claim the employee retention credit is December 31, 2021. This means that businesses have just a few more months to assess their eligibility and apply for this valuable credit. Once the deadline passes, any potential savings from this credit will be lost.
To qualify for the employee retention credit, businesses need to meet specific criteria. Firstly, they must have been in operation between February 15, 2020, and December 31, 2021. Secondly, they must have experienced either a full or partial suspension of operations due to a government order or a significant decline in gross receipts compared to the same quarter in 2019.
The credit itself is worth up to 50% of qualified wages paid to employees, with a maximum credit of $5,000 per employee per year. Furthermore, the credit is refundable, meaning that even if a business doesn’t owe any taxes, they can still receive the credit as a cash refund.
The employee retention credit has already proven to be a lifeline for many businesses, helping them retain employees and stay afloat during these unprecedented times. It has assisted in reducing the financial strain on businesses and has provided some financial security for their employees.
As the deadline approaches, it is crucial for businesses to evaluate if they meet the eligibility criteria and take the necessary steps to claim the employee retention credit. This may involve working closely with their tax advisor or reaching out to the Internal Revenue Service (IRS) for guidance.
In conclusion, the employee retention credit provides a last chance for businesses to save on their tax bills and preserve their workforce. With the December 31, 2021 deadline rapidly approaching, time is of the essence. Businesses that meet the eligibility criteria should act now and take advantage of this valuable credit before it’s too late. The employee retention credit could make a significant difference in the financial stability and future of many businesses during these uncertain times.