| Next year's taxes: how your employees can save you money |
| | Good morning,
When President Biden signed the $1.9 trillion American Rescue Plan Act into law on Thursday, he authorized the extension of something important for small-business owners: the Employee Retention Credit, a refundable tax credit designed to make it easier to keep employees on payroll.
Originally scheduled to end on June 30, the ERC will continue at least through the end of 2021, giving business owners access to as much as $33,000 per employee in incentives between last year and this year. The credit will work slightly differently during the first and second halves of the year. From January 1 through June 30, eligible employers can claim refundable credits equal to 70 percent of a full-time employee’s qualified wages paid, against their share of Social Security tax. You can get a maximum of $14,000 in credits per employee.
On July 1, that’ll change. The new law allows businesses to claim the refundable credit against their share of employment taxes, including Medicare. Again, you can get a maximum of $14,000 per employee in credits this way, meaning business owners this year could qualify for up to $28,000 per worker, in total.
That might be a significant chunk of change for your company. Read our story to learn the details and fine print you need to know, for both today’s filing deadline and next year’s tax season. |
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