Three new tax credits are available to employers affected by COVID-19.
Employee Retention Credit
The employee retention credit is a refundable credit of 50% of up to $10,000 in wages paid by an eligible employer. The credit is not available to businesses who take out a PPP loan.
To qualify for the credit, the business must be fully or partially suspended by government order due to COVID-19 during the quarter and the business' gross receipts must be below 50% of the comparable quarter in 2019. Once the business' gross receipts go above 80% of a comparable quarter in 2019, the business no longer qualifies at the end of that quarter.
Paid Sick Leave, Family Leave Credits
Employers can receive credits for employees who are unable to work due to:
- coronavirus-related quarantine
- COVID-19 symptoms (and the employee is seeking a medical diagnosis)
- caring for someone with COVID-19
- caring for a child or children whose school or daycare is closed because of the coronavirus
Eligible employers can immediately receive a credit in the full amount of the required sick or family leave, as well as related health plan expenses and the employer's portion of Medicare tax on the leave, through December 31, 2020.
To Receive the Credit
Eligible employers will report their qualified wages and related health insurance costs on their quarterly employment tax returns or Form 941 for subsequent quarters. If the business' employment tax deposits do not cover the credit, they can receive an advance payment from the IRS by submitting