CARES Employee Retention Tax Credit Program
We want to help you feel confident in understanding and accessing your options when it comes to COVID-19 government relief programs so you can protect your business and take care of your team. Here is a simple outline about the CARES Employee Retention Tax Credit Program.
Today we launched the CARES Employee Retention Tax Credit in Justworks. Currently, this supports a subset of our customers, so please read carefully to understand your eligibility, what you can do in Justworks, and when you can do it.
What is the Employee Retention Tax Credit?
This program helps to keep employees on payroll by providing employers with tax credits up to $5,000 per eligible employee. This tax credit applies to qualified wages paid between March 13, 2020 and Decemeber 31, 2020.
To opt in, companies:
Must have experienced either (i) a complete or partial closure during any calendar quarter in 2020 due to government orders limiting commerce, travel, or group meetings as a result of COVID-19 or (ii) a significant decline (at last 50%) in gross receipts during a 2020 calendar quarter compared to the same quarter in 2019, and Must not be participating in the Paycheck Protection Program (PPP loans).
The scope of employee eligibility varies depending on the average number of full-time employees a company had in 2019. Under IRS guidance, certain related entities may be considered a single employer.
Companies that averaged 100 or fewer full-time employees in 2019
If you averaged 100 or fewer full-time employees in 2019, this tax credit can be claimed for all your employees provided that your company meets the eligibility requirements. Your company is responsible for maintaining records sufficient to demonstrate eligibility.
At this time, only supporting the tax credit opt-in for companies that averaged 100 or fewer full-time employees in 2019. Once you opt in, a credit for the employer portion of your Social Security taxes will start with your first payroll payment after your opt-in date. You will begin to see these credits on your invoices and in forecasts from May 11.
If you received a PPP loan or you’re in the middle of your PPP loan application, you should not opt into the Employee Retention Tax Credit. If you do opt into the tax credit, you will become ineligible for a PPP loan
Companies that averaged 101 or more full-time employees in 2019
If you averaged 101 or more full-time employees in 2019, this tax credit can only be claimed for wages paid to employees who are not performing services due to (i) the employer’s complete or partial closure by governmental authority due to COVID-19 or (ii) significant decline in gross receipts.
We’re still working on supporting the tax credit opt-in for companies that averaged 101 or more full-time employees in 2019. Our goal is to get it into your hands as soon as possible. We will reach out when you can claim the Employee Retention Tax Credit.