While much attention has been focused on the Paycheck Protection Program, there are two additional programs designed to help COVID-19 affected businesses retain employees: Employee Retention Tax Credit (ERTC) and Employer Social Security Tax Deferral.
The Employee Retention Tax Credit (ERTC), effective 3/12/20 thru 12/31/20, is available to qualified employers who did not obtain a Paycheck Protection Program (PPP) loan, and provides a refundable tax credit to employers equal to 50% of up to $10,000 of each employee’s wages, including employer-paid health care costs. The ERTC is applied against the employer’s share of social security taxes; an advance credit can be obtained by reducing payment of federal payroll taxes due to the IRS, and/or requesting an advance credit from the IRS if the available credit exceeds federal payroll taxes due. To determine if your business qualifies for the ERTC, see irs.gov/coronavirus/employee-retention-credit. Payroll Vault can prepare the complicated forms and payroll tax returns needed to claim the ERTC credit-freeing you up to concentrate on your business!
The Employer Social Security Tax Deferral, effective 3/27/20 thru 12/31/20, allows employers to defer payment of the employer’s share of social security taxes. All employers are eligible, including those who obtained PPP loans, and are allowed to defer the employer social security tax prior to determining the amount of ERTC they are eligible for and that can be applied against federal payroll tax payments. Repayment of the deferrals are due in 50% increments on December 31, 2021 and December 31, 2022. Tracking the deferrals and repayments is vitally important to ensure your business is not penalized-Payroll Vault can do the tracking for you.
Reporting requirements for both the ERTC and employer social security tax deferral are complicated, requiring significant time and detailed documentation. Outsource your payroll to Payroll Vault for help with these programs.