We previously informed you of an opportunity to take an Employee Retention Credit for 2020 (see our blog post from February 22nd).  Hopefully, many of you have begun work with your CPAs and payroll companies to get this credit moving along, although there is no rush to process this credit.  You have up to two years after the fact to go back and claim the credit. 

As part of the Disaster Tax Relief Act of 2020, business owners are also able to claim the Employee Retention tax credit for 2021 if eligible.  To determine whether or not you are eligible, you should compare your Quarter 1 2019 to your Quarter 1 2021.  If you have experienced a drop in revenue of 20% or greater, then you are eligible for a refundable credit of up to $7,000 per employee. 

Although many of our clients are experiencing better than ever collections, some of you may be eligible if you got off to a slow start this year or if you had a particularly great first quarter in 2019.  We encourage everyone to at least check to see if they are eligible for this credit.

If you are eligible for the credit, the amounts should be reflected on your first quarter 941 to allow for the refundable credit to flow through to you. Work with your payroll company and/or your CPA to ensure that you file for the credits correctly.