The Employee Retention Tax Credit (ERTC) is a valuable tax incentive for businesses that have been affected by the COVID-19 pandemic. The credit was first introduced in 2020 and has been extended through 2021. But what about 2022? Is the ERTC available for 2022?
The answer is yes, the ERTC is available for 2022. The American Rescue Plan Act of 2021 (ARPA) extended the ERTC through December 31, 2021. This means that businesses can take advantage of the credit for the entire year of 2022. The ARPA also made some changes to the ERTC, including increasing the amount of the credit and expanding eligibility.
What is the Employee Retention Tax Credit?
The ERTC is a refundable tax credit that is available to employers who have experienced a significant decline in gross receipts due to the COVID-19 pandemic. The credit is equal to 70% of qualified wages paid to employees, up to $10,000 per employee per year. The credit can be claimed on Form 941, Employer's Quarterly Federal Tax Return.
Who is Eligible for the Employee Retention Tax Credit?
The ARPA expanded eligibility for the ERTC. Under the new rules, businesses with 500 or fewer employees are eligible for the credit. This includes businesses that are part of a controlled group or an affiliated service group. Businesses with more than 500 employees are also eligible if they have experienced a significant decline in gross receipts.
How Much is the Employee Retention Tax Credit Worth?
The ARPA increased the amount of the ERTC from 50% to 70% of qualified wages paid to employees, up to $10,000 per employee per year. This means that businesses can now claim up to $7,000 per employee per year in tax credits.
How Do I Claim the Employee Retention Tax Credit?
Businesses can claim the ERTC on their quarterly federal tax return (Form 941). The credit can be claimed for wages paid between January 1, 2021 and December 31, 2021. Businesses must also provide documentation to support their claim, such as payroll records and other documents.
Conclusion
The Employee Retention Tax Credit is available for 2022 and has been expanded by the ARPA. Businesses with 500 or fewer employees are eligible for the credit, which is equal to 70% of qualified wages paid to employees, up to $10,000 per employee per year. The credit can be claimed on Form 941 and must be supported by documentation.
