More information available on claiming employee retention tax credit

The IRS this month released additional guidelines for employers claiming the employee retention tax credit created by the 2020 Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act.

Employers can claim the credit if they paid “qualified wages” between March 12, 2020 to Jan. 1, 2021 while experiencing a suspension of operations or a significant revenue decline because of the COVID-19 pandemic.

Another 2020 law, the Taxpayer Certainty and Disaster Relief Act, allows employers that received a loan under the Payroll Protection Act to claim the employee retention credit. The additional IRS guidelines explains when and how employers who got a PPP loan can claim the employee retention credit for 2020.

Basically, employers need to choose between receiving PPP loan forgiveness or claiming the employee retention credit. The IRS guidance also defines what’s included in “qualified wages,” and the document lays out retroactive changes affecting the 2020 tax credit.