70% of small business owners applied for emergency loans with the CARES Act. The $2.2 trillion relief bill offered a variety of options for businesses to ease the burden the COVID-19 pandemic caused.
A few of the pandemic relief programs included: payroll tax deferrals, employee retention tax credits, and changes to how much of a loss a business can claim.
Keep reading to understand more about the CARES Act. And learn more about employee retention tax credit eligibility requirements.
What Is the CARES Act?
Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020. This bill delivered fast and direct help to citizens and businesses during the pandemic.
A few common provisions of the CARES Act were paycheck protection and small business tax credit programs. There are also two credits available for small businesses and they are outlined below.
Paid Leave Credit
Congress passed the Families First Coronavirus Response Act to help families affected by the pandemic. They created the paid leave credit to offset the requirements..
The paid leave credit is a tax break for businesses. Businesses can claim up to $5,000 per employee that takes leave due to COVID-19. These include:
- COVID-19 positive employees
- Employees caring for a family member with COVID-19
- Employees in quarantine for exposure
The CARES Act stated employees with less than 500 employees have to follow the guidelines. Employers must pay sick and family leaves for employees affected by the pandemic.
Paid Leave Requirements
Employees can take 80 hours of paid sick leave. This is capped at $511 a day ($5,110 total) for a sick or quarantined employee.
For those employees out due to quarantine or lack of child care during school closures, two-thirds of their regular wage (capped at $200 a day and $10,000 total) is required. Employers have to provide 10 more weeks of leave for these employees.
Employee Retention Credit
The employee retention credit is for businesses that lost business during the pandemic. It is a credit for up to $5,000 per employee per quarter for wages paid from March 2020 to December 2020.
The government revised the law in 2021. You can now claim up to $7,000 per employee per quarter for wages paid in 2021.
Check out this blog post for more FAQs about employee retention credit. You’ll find outlined details about what suspended business operations means.
There is also information about how to use your credit and how to determine qualified wages.
Please note you must do this entire process for each company if you own more than one business.
How Many Workers Are Required?
There is not a minimum requirement for how many employees your business has. As long as your business was suspended and lost 50% or more of gross receipts, you are eligible for this credit.
What Types of Businesses?
All types of businesses are eligible for this credit, except:
- Federal
- State
- Local government
- Some self-employed individuals
- Household employers
Some tribal governments are eligible. When you fill out an application, you quickly will see if your business is eligible or not. If you’re still unsure, you can reach out to a professional for help.
At ERC Today, we are experts in employee retention credit and are eager to help your business.
Employee Retention Tax Credit Eligibility
The initial CARES Act named businesses that were partially or fully suspended during the mandated shutdowns as eligible. During the 2021 revisions, the types of companies eligible expanded to include:
- Recovery startup businesses
- Companies in severe financial distress
A recovery startup business is for employers who started their business after February 15, 2020. They must also have $1 million in gross receipts and be ineligible otherwise.
For companies to be in severe financial distress, they must have a 90% decline in gross receipts. This number is compared to the same quarter in 2019 to determine the percentage.
Why ERC Today?
You’re probably asking yourself why you should work with ERC Today. We’ve outlined a few advantages to using our company below. You can contact us if you have any questions or need support.
At ERC Today, we have an experienced team on staff dedicated to helping your business. We offer enterprise-level support. After conducting a thorough analysis, we can help guide your company in receiving pandemic relief.
We have transparent reporting. We help businesses across the United States with their CARES Act applications.
Flexible Tax Experts Ready to Help You Today
ERC Today is quick, flexible, and easy. Our entire team is made up of tax experts and we’re ready to help you with your application and tax needs.
Keep Your Information Secure and Submit Your Application Quickly
Clients have applications submitted in 5 days or less! Our client portal is secure, meaning your information is safe and confidential.
Don’t Pay Anything Up Front
You can get an estimate of how much it will cost to file the employee retention credit application in minutes. There’s no risk with our process!
As tax consultants, we will assess your application thoroughly. We will then document your eligibility and calculate your potential credit amount.
Transparent Fees
We have a flat rate to file and amend 941-X returns. If you are eligible, the fee is a percentage of the employee retention credit you receive.
Start Your Application Today
Now that you understand the employee retention tax credit eligibility requirements, you are ready to move forward. Collect the necessary information needed and get started with applying for the CARES Act!
Do you want to consult an expert to help you submit your documents? Are you ready to partner with ERC Today and get started on your application? Contact us today for help!
The CARES Act: Active Workers Frequently Asked Questions (FAQs)
What relief programs were included in the CARES Act for small businesses?
The CARES Act offered various relief programs for small businesses, including payroll tax deferrals, employee retention tax credits, and changes to how much of a loss a business can claim.
What is the Paid Leave Credit under the CARES Act?
The Paid Leave Credit is a tax break for businesses that allows them to claim up to $5,000 per employee who takes leave due to COVID-19, including employees who are COVID-19 positive, caring for a family member with COVID-19, or in quarantine for exposure.
What are the Paid Leave Requirements for employees under the CARES Act?
Employees can take 80 hours of paid sick leave, capped at $511 a day ($5,110 total) for a sick or quarantined employee. For employees out due to quarantine or lack of child care during school closures, they must be provided two-thirds of their regular wage (capped at $200 a day and $10,000 total) and 10 additional weeks of leave.
What is the Employee Retention Credit?
The Employee Retention Credit is a credit for businesses that lost business during the pandemic. It provides up to $5,000 per employee per quarter for wages paid from March 2020 to December 2020, and up to $7,000 per employee per quarter for wages paid in 2021.
Are there any minimum employee requirements for eligibility for the Employee Retention Credit?
No, there is no minimum employee requirement. As long as your business was suspended and lost 50% or more of gross receipts, you are eligible for this credit.
What types of businesses are not eligible for the Employee Retention Credit?
Federal, state, and local government entities, some self-employed individuals, and household employers are not eligible. However, some tribal governments may be eligible.
