Is it possible for an employer to use the Employee Retention Tax Credits (ERTC)  currently without waiting for the filing of the employer’s 2020 tax return?

Posted by: Bonita Hatchett-Bodle    Apr 22, 2020 12:43:26 PM

Yes. The tax credit is equal to 50% of qualifying wages not in excess of $10,000 per employee for 2020, which caps the tax credit at $5,000 per employee. If an employer employs 100 or fewer employees, qualifying wages includes all wages whether or not in the form of paid leave or for the performance of services. Employers employing 100 or more employees may only include paid leave in the determination of qualifying wages for ERTC purposes. The employer is able to use the tax credit presently by reducing the current quarterly payroll tax obligation by the amount of the tax credit, without the need to wait until the employer’s annual tax return is filed. Form 7200 is not required to be filed in order for the employer to use the tax credit now as opposed to waiting until the filing of the employer’s annual return.

Topics: ERTC tax credit, IRS Form 7200