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COVID-19 Credits under the FFCRA and CARES Acts

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Andy Starnes
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Andy StarnesPartner
Steven Murphy
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Steven MurphyPartner
Chris Arnone
Partner
Chris ArnonePartner

COVID-19 Credits under the FFCRA and CARES Acts

The Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Families First Coronavirus Response Act (FFCRA) provide certain credits to qualifying employers for keeping employees on payroll during the pandemic as well as providing paid sick and family leave wages to their employees for leave related to COVID-19.

Under the CARES Act, small- and mid-size companies that have either 1) a significant decline in revenues during 2020 or the first two quarters of 2021 or 2) had a partial or full suspension of operations due to a government order may be eligible for the Employee Retention Credit (“ERC”). A significant decline in revenues is generally defined as a quarterly decline of more than 50% in any 2020 quarter as compared to the same quarter in 2019. For the first two quarters of 2021, the quarterly revenue decline would need to be more than 20% as compared to the same quarter in 2019.

The ERC is a refundable tax credit of 50% of qualified wages, up to $10,000, for 2020. For 2021, under the Consolidated Appropriations Act, the credit is increased to 70% of qualified wages, up to $10,000, paid per quarter by an eligible employer whose business has been financially impacted by COVID-19. That results in a potential maximum credit of $19,000 per employee over the two years.

Under the FFCRA, small- and mid-size employers are eligible for refundable tax credits that reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees related to COVID-19. For businesses with fewer than 500 employees, the FFCRA offers funds to provide employees up to 80 hours of paid sick leave to care for themselves or the health of family members. Workers can get up to an additional ten weeks of paid family leave to care for a child whose school, place of care or child care provider is closed or unavailable due to COVID-19 precautions. The FFCRA covers the costs of this paid leave by providing small businesses with refundable payroll tax credits. Certain self-employed individuals in related circumstances are entitled to similar credits.

We can help you identify the tax credits you may be eligible for under the CARES Act and the FFCRA, as well as assist you in calculating the related credits.

Contact our team for assistance.

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