A Game-Changer for Employers: Exploring the Latest Updates to the employee retention credit in 2022
In the wake of the COVID-19 pandemic, employers have been facing unprecedented challenges in retaining their workforce and keeping their businesses afloat. To provide relief to struggling businesses, the employee retention credit (ERC) was introduced as part of the CARES Act in 2020. The ERC was meant to incentivize employers to retain their employees by providing a refundable tax credit against certain employment taxes.
Now, as we enter 2022, the ERC has undergone several updates that have the potential to be a game-changer for employers. These updates have expanded the eligibility criteria and increased the available credit, making it an even more attractive option for businesses looking to retain and rehire employees.
One of the most significant updates to the ERC in 2022 is the expansion of eligibility to more businesses. Previously, the ERC was only available to businesses that experienced a significant decline in gross receipts or were subject to a full or partial suspension of operations due to government orders related to COVID-19. However, under the American Rescue Plan Act, businesses that were not in existence for all or part of 2019 may now be eligible for the credit based on a modified gross receipts test.
Additionally, the maximum credit amount has been increased for 2021, allowing eligible employers to claim a credit of up to $7,000 per employee per quarter, compared to $5,000 in 2020. This increase in the credit amount can provide significant financial relief to businesses struggling to retain their workforce in the face of ongoing economic challenges.
Furthermore, the ERC is now available to businesses that received Paycheck Protection Program (PPP) loans, which was not the case in 2020. This means that businesses can now take advantage of both the PPP loan forgiveness and the ERC, providing them with a dual benefit to help weather the financial impact of the pandemic.
It’s important for employers to be aware of these updates to the ERC and consider how they can leverage this valuable tax credit to support their workforce and bottom line. By taking advantage of the ERC, businesses can not only receive financial relief but also maintain a stable and productive workforce, which is essential for long-term success.
In conclusion, the latest updates to the employee retention credit in 2022 have transformed it into a powerful tool for employers to retain and rehire employees, especially in the face of ongoing economic challenges. Business owners and executives are encouraged to explore the eligibility criteria and take advantage of this valuable tax credit to provide much-needed support to their businesses and employees. As we continue to navigate the post-pandemic landscape, the ERC stands out as a game-changer for employers seeking to weather the storm and emerge stronger than ever.