Share this content

Employee Retention Credit Under COVID-19 Relief


The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 is a $900 billion relief package to deliver a second round of economic stimulus for individuals, families, and businesses. This legislation provides relief through multiple measures and expands many of the provisions already put into place under the CARES Act.

Jan 20th 2021
Share this content

Here is a recap of the Employee Retention Credit under the CARES Act and the higher-impact modifications under the latest COVID-19 Relief Package.

CARES Act - Employee Retention Credit

  • Up to $10,000 of wages per employee
  • Payroll credit of up to 50 percent of qualifying wages paid after March 13 through Dec. 31, 2020
  • You reduce federal tax deposits for withholdings related to payroll
  • If the deposits are not enough to cover the credit you can apply for an advance

How to report the credit:

  • Form 7200 was available to request an Advance Credit for the first quarter of 2020 tax reductions (qualifying wages from March 13 to March 31).
  • Federal Form 941 (effective for Quarter 2) can be used to report any credits for qualifying wages between Quarter 2 and Quarter 4 of 2020.

Register for free to continue reading

It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:

Content lock down, tick icon

View all AccountingWEB content

Content lock down, tick icon

Comment on articles

Access content now

Already have an account?

Replies (2)

Please login or register to join the discussion.

By Cynthia Wiederhold
Jan 21st 2021 12:14 EST

I would like others opinion on this example:

Employee X wages in Quarter 1, 2 and 3 = $50,000.
PPP Loan used for $20,000
Sick pay credits used for $2,000
Which leaves $28,000 available for ERC.
Limited to $10,000 = ERC of $5,000.

Or are total wages limited to $10,000 and since all used for PPP loan, no ERC available?

Thanks (1)
John S
By John Skowronski
Jan 31st 2021 16:40 EST

Assuming that the company was an Eligible Employer during the entire period (Through Government Orders or a >50% decline in Gross Receipts) and that the company had less than 100 Full Time Employees per their 2019 average, where you can include all wages, the remaining $28K of wages would be available for the ERC. That in turn would be capped at $10K and at 50%, the ERC would be $5K.

However, if they had over 100 Full Time Employees per their 2019 average, they would only be able to include Qualified Wages (Wages paid for no services) during the time that they were an Eligible Employer. That may or may not overlap with the PPP Forgiveness Period or when the FFCRA was claimed. That could result in a much different answer.

Thanks (1)