DC Tax Flash: New Guidance Issued for Claiming Employee Retention Credit in 2021
- the increase in the maximum credit amount;
- the expansion of the category of employers that may be eligible to claim the credit;
- modifications to the gross receipts test;
- revisions to the definition of qualified wages; and
- new restrictions on the ability of eligible employers to request an advance payment of the credit.
The IRS notes that eligible employers "can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees after December 31, 2020, through June 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum employee retention credit available is $7,000 per employee per calendar quarter, for a total of $14,000 for the first two calendar quarters of 2021." Employers with an average of 500 or fewer full-time employees can request advance payment of the credit.
The IRS says it will soon issue additional guidance for eligible employers covering wages paid in the last half of 2021.
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