Last updated on April 11, 2020
This portion of the CARES Act gives businesses a tax credit worth 50% of employee wages (up to $10k per employee) for wages paid between Mar 12, 2020 and the end of the year. Note that you can’t do a PPP loan and also take this credit – you must choose between the two.
- Who: Employers whose businesses are impacted by COVID-19 either because of decreased revenues or mandated shutdowns – and who do not take a PPP loan
- What: A refundable tax credit of 50% of employee wages, up to $10k in wages ($5k in credit) per employee
- When: Applies between Mar 12, 2020 and the end of the year
- Where: Dealt with as part of filing quarterly and annual tax returns to the IRS
- How: Employers using this option can offset the payroll taxes they submit to the IRS; if that’s not enough, they can use IRS Form 7200 to get a check for what they’re owed
- Why: This program was designed to encourage employers to keep employees on payroll through the crisis
Places to Get Official Information
Start Here
- IRS information page about the Employee Retention Tax Credit
- IRS FAQ about the Employee Retention Tax Credit
- Treasury Department “what you need to know” document on Employee Retention Tax Credit
- IRS Form 7200 for employers to get an advance on the tax credit, and instructions for IRS Form 7200
Extra Credit
- Portion of the CARES Act establishing the Employee Retention Tax Credit
Places to Get Unofficial Information
- US Chamber of Commerce guide to the Employee Retention Tax Credit
- Journal of Accountancy article on COVID-related employer tax credits
- EisnerAmper article on Employee Retention Tax Credit