The Employee Retention Tax Credit (ERTC) is a new provision under the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act. It provides eligible employers with a credit for a portion of wages paid to employees during the COVID-19 pandemic.

To be eligible for the ERTC, an employer must have been carrying on a trade or business in 2020 and must have experienced a full or partial suspension of operations due to COVID-19, or a significant decline in gross receipts.

Qualified wages are wages paid to employees during the eligible period, which is from March 12, 2020 to December 31, 2020. The amount of qualified wages eligible for the credit is limited to the first $10,000 of wages paid to each employee during the eligible period.

The credit is equal to 50% of qualified wages paid to employees, with the maximum credit being $5,000 per employee. Employers can claim the credit on their quarterly employment tax returns, or they can request an advance payment from the IRS.

The ERTC is a valuable tool for employers to retain their employees during these difficult times. It is important for employers to understand the eligibility requirements and the calculation of qualified wages in order to take advantage of this tax credit.