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Employee Retention Credit Deadline July 31 - Jul 2020

Money
Contributed by : Mukesh Makker
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As a reminder, employers whose business has been financially impacted by COVID-19 can take advantage of the Employee Retention Credit, a refundable tax credit designed to encourage businesses to keep employees on their payroll. The credit is worth 50 percent of up to $10,000 in wages paid by an employer. Employers that are eligible for the credit for the first and second quarters of 2020, can apply for the credit when they file their second-quarter filing of Form 941, Employer's Quarterly Federal Tax Returnwhich is due July 31.


The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses that make small business loans. Qualifying wages are based on the average number of a business's employees in 2019 and are divided into employers with fewer than 100 employees and employers with more than 100 employees.


When employers report their qualified wages on Form 941, they can reduce their required deposits of payroll taxes withheld from employees' wages by the amount of the credit. Eligible employers also may use the employee retention credit with other relief including payroll tax deferral and can also request an advance of the employee retention credit by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19. Please call the office with any questions.


About Author
Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.

Website: https://www.taxmaker.com/newsletter.php#7

 

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