FAQs

What is the Employee Retention Credit?

The Employee Retention Credit is a fully refundable tax credit for qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees.

What are “qualified health plan expenses”?

Qualified health plan expenses are amounts paid or incurred by an Eligible Employer that are properly allocable to employees’ qualified wages to provide and maintain a group health plan, but only to the extent that these amounts are excluded from the employees’ gross income.

May an Eligible Employer receive both the tax credit for qualified leave wages under the FFCRA and the Employee Retention Credit under the CARES Act?

Yes, but not for the same wages. The amount of qualified wages for which an Eligible Employer may claim the Employee Retention Credit does not include the amount of qualified sick and family leave wages for which the employer receives tax credits under the FFCRA.

Who is an Eligible Employer?

Eligible Employers for the purposes of the Employee Retention Credit are employers that carry on a trade or business during calendar year 2020, including tax-exempt organizations, that either: (1) Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or (2) Experience a significant decline in gross receipts during the calendar quarter; or (3) began operations after February 14th 2020.

Against what employment taxes does the Employee Retention Credit apply?

The credit is allowed against the employer’s share of social security taxes under section 3111(a) of the Internal Revenue Code (the “Code”), and the portion of taxes imposed on railroad employers under section 3221(a) of the Railroad Retirement Tax Act (RRTA) that corresponds to the social security taxes under section 3111(a) of the Code.

How much money can I receive per employee?

Your business can receive up to $26k per W-2 employee.

When is the operation of a trade or business partially suspended for the purposes of the Employee Retention Credit?

The operation of a trade or business is partially suspended if an appropriate governmental authority imposes restrictions on the employer’s operations by limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19 such that the employer can still continue some, but not all of its typical operations.

Can I receive both PPP and ERTC?

Yes, but not for the same wages. In other words, you cannot claim for the same period of time, both PPP forgiveness and ERTC.

Are Eligible Employers required to withhold federal employment taxes on qualified wages paid to employees?

Yes. Qualified wages are wages subject to withholding of federal income tax and both the employer’s and employee’s shares of social security and Medicare taxes. Qualified wages are also considered wages for purposes of other benefits that the employer provides, such as contributions to 401(k) plans.