The IRS recently came out with Notice 2021-20 providing guidance on the employee retention credit. This guidance is specific to 2020, but the concepts can also be applied to 2021. The Employee Retention Credit encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19 by meeting a gross receipts test or by having partial suspensions of operations.
This notice includes updated questions and answers on the following employee retention credit topics:
- Eligible Employers
- Aggregation Rules
- Governmental Orders
- Full or Partial Suspension of Trade or Business Operations
- Significant Decline in Gross Receipts
- Maximum Amount of Employer’s Employee Retention Credit
- Qualified Wages
- Allocable Qualified Health Plan Expenses
- Interaction with PPP Loans
- Claiming the Employee Retention Credit
- Special Issues for Employees: Income and Deduction
- Special Issues for Employers: Income and Deduction
- Special Issues for Employers: Use of Third-Party Payers
- Substantiation Requirements
Stay Tuned
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