The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make.
Also, if the employer’s employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS.
People have been reaching out to CMS to ask us whether they are able to take advantage of both the new Employee Retention Tax Credit AND the WOTC Tax Credit.
Correlation between WOTC & the Employee Retention Credit:
Are you taking advantage of the Work Opportunity Tax Credit?
- If you have 100 or less full time employees, paying your employees through the COVID-19 period, not taking advantage of the Paycheck Protection Program, then you can take advantage of the Employee Retention Credit for the employees not qualified through WOTC.
Are you an Employer who is experiencing a 50% decline in gross receipts compared to the same quarter last year 2019?
Are you continuing operations and paying employees during this COVID-2019 Period?
- If yes, the Employee Retention Credit can apply to wages paid from March 12, 2020 – January 1, 2021.
Do you have on average of 100 full-time Employees or less?
- Employers with over 100 average employees do not qualify for the Employee Retention Credit.
Are you taking advantage of the Payroll Protection Plan?
- If yes, you cannot take advantage of both plans.
Additional Reading:
Employee Retention Credit (IRS Website)
Paycheck Protection Program (SBA website)
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