The unemployment level in the US was 3.6 % in January 2020. during this time, the country had seen the lowest level of employment in the last fifty years. Later on, in February 2021, there was an even lesser number of people employed as compared to February 2020. The reason behind this decline in employment is straightforward and simple. Due to the COVID-19 pandemic and the responses of the state, federal, and local governments, there have been several businesses that had to downsize and close down.
In order to minimize the damage, the government introduced the CARES Act and this act includes the advantages of ERC. If you have a business in California, you can find an ERC specialist for California business who can guide you on the benefits and the process of application. Here are the benefits of ERC.
Social Security Tax liability is lowered
The ERC reduces the Social Security tax liability of an employer. In case the credit that you get from your ERC surpasses the tax liability of Social Security, you become eligible for a refund. When that financial quarter ends, the amount of the credits is assembled on the employer’s Form 941.
Tax credit has been extended to 2021
As the effects of the pandemic kept accumulating and affecting businesses in various regions, the government announced an expansion of the Employee Retention Tax Credit till 2021. The tax credit, thankfully, expands into all 4 quarters of 2021. The 2021 update is the main reason why employers can now get 70% of the $10,000 of qualified wages per employee.
You are allowed to claim ERC for several employees
Businesses of different sizes are allowed to claim Employee Retention Tax Credit for several employees. For instance, a small employer can claim ERC for the wages of all its employees. According to the CARES Act, a small employer is someone who has 100 or fewer employees. If you have more than 100 employees, you may determine your credit amount and still qualify for the same.
As you can see that there are many benefits of employee retention tax credit, you just have to determine whether or not you qualify. In order to get started, you may hire an ERC specialist who can help you deal with the pros and cons of claiming the tax credit. Make sure you know every single detail before applying for ERC.