The Employee Retention Tax Credit is a refundable federal income tax credit that gave businesses the ability to recoup employee wages and health insurance costs, up to $21,000 per employee for the calendar year 2021 and $5,000 per employee for 2020 still. ERTC first appeared as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March of 2020, then was amended by the Taxpayer Certainty and Disaster Relief Act of 2020 (Relief Act), and then the American Rescue Plan (ARP) Act of 2021.
The signing of the Infrastructure Investment and Jobs Act in 2021 reduced the period that the program applied to by eliminating the fourth quarter of 2021 for most businesses. Fortunately, eligible businesses can retroactively claim ERTC based on the periods for which qualified wages or expenses were paid. The credit maximums are also influenced by these timeframes.
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