The 2021 Employee Retention Tax Credit

Has your business been disrupted due to COVID-related governmental orders? With the many COVID-19 pandemic challenges endured by small to mid-sized businesses, there is some good news. The newest 2021 Employee Retention Tax Credit (ERTC) program provides eligible businesses with a fully refundable, advanceable tax credit on qualified employee wages, and opens the ERTC program to PPP borrowers for the first time. 

Originally introduced in the 2020 CARES Act, the employee retention tax credit gained traction but was not as accessible to business owners as it is today. Guardrails around PPP, employee counts, and revenue restrictions made it difficult for many employers to meet the qualification criteria.

However, multiple modifications and enhancements of the program in the 2021 Consolidated Appropriations Act (CAA) and subsequent American Rescue Plan Act (ARPA) now make this program very valuable for qualifying businesses. This is currently one of the largest credits available to business owners, delivering thousands of dollars in credits per employee with qualified wages. The new law allows taxpayers to claim a credit against 70% of qualified wages paid (up to $10,000 per employee per quarter) and extends the program through Dec. 31, 2021. In short, qualifying businesses could claim up to $7,000 per quarter per employee or up to $28,000 per employee for 2021.

Many businesses are today unaware of their eligibility under the 2021 changes, including retroactive qualification in 2020 for businesses that obtained PPP. You could also potentially qualify if your business was impacted by the effects of government-mandated shutdowns, interruptions in your supply chain or inability to work with your vendors, reduction in hours of operation, and many other factors

Here is a CHECKLIST that provides additional information and examples of eligibility for this program.

The ERTC program refinements in 2021 are intended to reach more businesses and help more Americans stay employed. This is achieved by providing a refundable credit to offset or potentially eliminate payroll tax for business owners who were impacted by the pandemic.

If you missed our informational webinar in May, click below to watch the recording to learn more from qualified experts, and see if your business may qualify.

CLICK HERE for a copy of the 2021 Employee Retention Tax Credit slide presentation.

For more information please contact Sue Arellano, Director of Business Assistance, at (661)-288-4411.

The Santa Clarita Valley Economic Development Corporation (SCVEDC) is a unique private / public partnership representing the united effort of regional industry and government leaders. The SCVEDC utilizes an integrated approach to attracting, retaining and expanding a diversity of businesses in the Santa Clarita Valley, especially those in key industry clusters, by offering competitive business services and other resources.