Some good news for home care employers: Congress has expanded a COVID-19-related refundable tax credit. It is known as the employee retention credit (ERC). But there are a few changes for 2021.
The ERC was enacted as part of the Coronavirus Aid, Relief and Economic Security Act, known as the CARES Act. It is a fully refundable tax credit that can be as high as $26,000 per employee. Originally, the ERC was equal to 50% of up to $10,000 in wages paid to each employee before Jan. 1, 2021. However, Congress has since extended and expanded the ERC through subsequent COVID-19 legislation. As a result of the new legislation, eligible employers can now claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages paid to employees after Dec. 31, 2020, through Sept. 30, 2021. Qualified wages are limited to $10,000 per employee per calendar quarter in 2021 for the first three calendar quarters. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $21,000 in 2021.
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