The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, is designed to encourage Eligible Employers to keep employees on their payroll, despite experiencing economic hardship related to COVID-19, with an employee retention tax credit (Employee Retention Credit).
The Families First Coronavirus Relief Act (FFCRA) requires certain employers to pay sick or family leave wages to employees who are unable to work or telework due to certain circumstances related to COVID-19. Employers are entitled to a refundable tax credit for the required leave paid, up to specified limits. [See FAQs]. The same wages cannot be counted for both credits.
Entities that take out loan under the Paycheck Protection Program are not eligible for this credit.
Calculation of the credit is 50% of qualified wages between 3-12-2020 through the end of 2020 with wages capped @10K per quarter/per employee creating a $5K per employee maximum credit. For more information and to see if your business might qualify see https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act
