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Employee retention credit

The credit is available to all employers including tax exempt organizations that have experienced an economic hardship due to COVID-19. However it is not applicable to:

• Federal, state and local governments and their instrumentalities, and
• Small businesses that receive small business loans under the Paycheck Protection Program.

The tax credit is 50% of up to $10,000 in qualified wages paid to an employee. The employer's maximum credit for qualified wages paid to any employee is $5,000. Qualified wages include the cost of employer-provided health care. The wages that qualify for the credit vary based on the average number of the employer's full-time employees in 2019.

To claim the credit, employer must file relevant forms indicating the total qualified wages and the related health insurance costs.

An employer claiming the credit must keep all employment tax records for atleast 4 years.

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