4.8.20 Reporting the New Employee Retention Credit

Reporting the New Employee Retention Credit:

Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a refundable payroll tax credit is available for 50% of qualified wages paid by eligible employers to employees after 3/12/20 and before 1/1/21.

The credit is available to employers, including nonprofits,

(1) whose operations were fully or partially suspended due to a COVID-19-related shutdown order, or

(2) whose gross receipts declined by more than 50% when compared to the same quarter in the prior year.

According to the IRS, if an employer paid any qualified wages between 3/13/20 and 3/31/20, it will include 50% of those wages, together with 50% of any qualified wages paid during the second quarter of 2020, on its second-quarter Form 941, Form 941-SS, or Form 941-PR to claim the employee retention credit. Employers should not include the credit on their first-quarter Form 941, Form 941-SS , or Form 941-PR. For more information, see www.irs.gov/forms-pubs/employee-retention-credit-for-employers-subject-to-closure-due-to-covid-19-crisis .


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