What is the Employee Retention Credit?
CO-CREATE | CO-DEVELOP | DELIVER
Jen: This is the PKF Texas - Entrepreneur’s Playbook®. I'm Jen Lemanski, and I'm here with Roland Robb, a member of our business advisory team. Roland, welcome to the Playbook.
Roland: Hi Jen. It’s great to be here.
Jen: So, I know you've been helping some of our clients with Employee Retention Credits. Can you tell me what that is?
Roland: Sure. The ERC, for short, is one of the stimulus programs that was created as part of the CARES Act passed in April of 2020. And it's been since expanded with two additional stimulus measures that were passed. What the credit does is it is a payroll tax credit against employer social security taxes, and it ultimately puts some money back into the pockets of employers that have retained their staff during the last 18 months or so.
Jen: So, who's actually eligible for the credit?
Roland: So, the credit actually has some different rules for 2020 versus 2021. And the rules for 2020 are a bit more restrictive and challenging to qualify for. Those rules were relaxed a bit more for the 2021 version of the credit. For 2020, all non-government entities can be eligible, and in 2021, some additional governmental agencies are eligible as well.
Jen: So, if someone's interested in exploring a little bit more and then potentially applying for the credit, how would they do that?
Roland: So, the credit is a credit against payroll taxes. So, they would file an amended 941 using Form 941-X. If they're going to file after the fact, or if they are filing for the credit contemporaneously in a period that in a quarter that just closed, they would fill out their updated Form 941.
Jen: Perfect. Well I'm sure there's some benefits to that, but let's get into that in a separate session. Sound good?
Roland: Works for me.
Jen: Perfect. This has been another thought leadership production brought to you by PKF Texas – The Entrepreneurs Playbook®. If you would like more information about the ERC, please visit www.PKFTexas.com. Tune in next week for another chapter.