Utilize the Payroll Tax Credit under the CARES act

by | Apr 11, 2020

Employers are eligible for business tax provisions like the payroll tax credit under the CARES Act. This includes a 50 percent refundable payroll tax credit on qualified wages [up to $10,000] with respect to each employee during the crisis. The credit is available to employers whose businesses were disrupted due to virus-related shutdowns and Employers that have gross receipts that are less than 50% of their gross receipts for the same quarter in the prior year are also eligible, until their gross receipts exceed 80% of their gross receipts for the same calendar quarter in the prior year. The credit is available for employees retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees.

The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020.

Additional Points

  • Tax credit is refundable
  • Credit is available to any employer carrying on trade or business during 2020, and
    • the trade or business was fully or partially suspended during the calendar quarter due to order from appropriate government authority limiting commerce, travel, or group meetings
  • Wages paid may not exceed what the employee would normally have been paid
  • Businesses treated as a single employer under the IRS shall be treated as one employer for this credit
  • Penalties will be waived if the employer was counting on these credits but they are later denied

Contact us for additional information or to discuss your specific situation.

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