payroll tax

8 Things You Need To Know About The 2020 Payroll Tax Credit

Gene Marks

There’s a lot of attention right now on programs like the Paycheck Protection Program and disaster loans offered by the Small Business Administration. Those options were meant to help business owners receive immediate funding as a crisis management strategy resulting from COVID-19. But there’s another big federal benefit that may apply to you: The Payroll Tax Credit (also known as the Employee Retention Credit).

1. The credit is part of the federal response to the pandemic.

As part of one of the numerous pandemic-related stimulus bills passed by Congress in March, the Payroll Tax Credit, otherwise known as the Employee Retention Credit, is a way to receive funding from the government. Eligible businesses must have been impacted by COVID-19 between March 12, 2020 and January 1, 2021. The intention of this credit is to help keep employees on the payroll for as long as possible by providing some tax incentives to employers. Non-profits also qualify, but self-employed individuals do not. Can owners of S-corporations, independent contractors or self-employed people apply for the payroll tax credit? Yes, as long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation.

2. The credit only applies if you don’t take money from the Paycheck Protection Program.

Because the credit is intended to provide additional subsidies to help employers maintain payroll levels, you can not apply for it if you’ve already opted in to the Paycheck Protection Program, which offered low cost forgivable loans that also cover payroll expenses. You are, however, eligible to apply for other types of loans, like the Economic Injury Disaster Loans, from the SBA. Also remember this is not a loan. It’s a credit against the employer’s share of FICA (6.2 percent) owed on your quarterly payroll.

3. The credit is in addition to the tax credit for Emergency Family Medical Leave.

This credit is not to be confused with the tax credit under the Families First Coronavirus Response Act (which includes Emergency Family Medical Leave provisions). This article is not intended to go into detail on that legislation, but know that if you’re paying for your employees to take time off for themselves or their families as a result of COVID-19, you’re also entitled to an additional credit to help you afford those expenses. You can use both tax credits, but just not for the same wages. You can learn more about the Families First Legislation on The Hartford’s Paid Family and Medical Leave Resource Center.

4. You must show your business has been significantly harmed by the pandemic.

To be eligible for the credit, you must demonstrate that either your business had to shut down during a payroll quarter because of the pandemic (as a result of a government order), or that your business suffered a 50% or greater loss of revenue during the quarter when compared to the previous year.

5. The credit is quite generous.

The credit is 50% of up to $10,000 of each employee’s wages (including healthcare premiums) each quarter through December 31, 2020. In other words, it’ll likely be $5,000 per employee each quarter, assuming they make more than $10,000 that quarter. So, if you have ten employees, you’ll get a $50,000 credit against your payroll taxes that quarter. If you had more than 100 full time employees in 2019, you include only full time workers. If you had less than 100 full time employees in 2019, you can include both full time and part time workers.

6. The credit is taken on your payroll tax returns.

This is not an income tax credit. It’s a payroll tax credit. That means you can take it against the employer’s share of FICA you owed during the eligible quarter when you do quarterly Federal 941 payroll tax returns.

7. The big news: it’s refundable!

More importantly, it’s refundable, which means that whatever portion of the credit you don’t need will be considered an over-payment of payroll taxes and will be returned back to you as cash.

8. You can also reduce your tax deposits.

If you think that you’ll be qualifying for the credit during a quarter, the IRS will allow you to hold back on your tax deposits so that you’ll have more cash available, rather than waiting for them to send you the cash back after you file your 941.

This payroll tax credit may not be for everyone, but it’s certainly applicable for your business if you’re not receiving any other aid. If that’s the case, it could be a substantial cash infusion from the government and may make the difference for your company’s survival. Talk to your accountant and payroll company to make sure you’re taking advantage!

Next Steps: Want to learn more? Sign up for the Small Biz Ahead newsletter to receive a weekly roundup of the latest tools, trends, and resources. 

173 Responses to "8 Things You Need To Know About The 2020 Payroll Tax Credit"
    • helena nguyen | April 23, 2020 at 6:31 pm

      Can a business take a payroll tax credits if that business applied for the Payroll Protection Program but not yet received any funding?

    • Gene Marks | April 29, 2020 at 10:20 am

      Nguyen:
      You can take payroll tax credits up until you get funded by PPP and then you can’t.

    • Rose | May 6, 2020 at 2:52 pm

      If a small business company that is impacted by Covid-19 was unable to reopen for business due to inability to receive relief funds from the government, what can this small business do?

    • Donald Booth | May 6, 2020 at 10:17 pm

      I gleaned from The 2 Responses, since we did not receive the ppp on the first round for our3 employees, that the time between Jan 1st and April 30, 2020 wages were not to be taxable? I just want to sure I understand it correctly.

    • Christina | May 6, 2020 at 10:17 pm

      How do I apply for the Payroll Tax Credit?

      • Small Biz Ahead Staff | May 7, 2020 at 2:43 pm

        Hi Christina – As long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Please reach out to gene@marksgroup.net for any specific business questions you may have!

    • Patricia Taylor | May 6, 2020 at 10:21 pm

      I have an employee that hasn’t been able to work part of this time because of her pregnancy. She ended up miscarrying the baby, and I want to cover all her time off with “paid personal time,” as I am a very small business owner and do not have sick leave. I did get the Payroll Protection loan – but isn’t her situation separate and shouldn’t I be able to get “paid sick leave credit”? She is back at work now, but only part time; and the Payroll Protection loan money will run out soon. Please help me know what I can do to help her. My business is more of a ministry (small Christian bookstore); I receive no pay myself, as there is no profit, but I need my workers and I am keeping them all paid, even though our revenues are extremely down.

      • Small Biz Ahead Staff | May 7, 2020 at 2:44 pm

        Hi Patricia – We encourage you to reach out to Gene directly with this question via email at gene@marksgroup.net. Thank you!

    • Marc Radin | May 6, 2020 at 10:23 pm

      Gene,

      I think you are laboring under a few incorrect assumptions:

      – The $5000 credit limit is for all of 2020…not for each quarter in 2020.
      – If you take the PPP you can’t take the ERC.

    • Isabel byland | May 6, 2020 at 10:26 pm

      I need help for my business

    • Kimpickens | May 6, 2020 at 10:26 pm

      Let’s say I receive my PPP funding on May 15, 2020 can I take the tax credit for quarter one we shut down March 18 and can I take a partial credit for part of quarter to if I don’t receive any funding until May 15 so I guess my question is that would be like two weeks during first quarter in six weeks during the second quarter

      • Small Biz Ahead Staff | May 7, 2020 at 2:47 pm

        Hello! Due to a high volume of specific business questions on this article, Gene is currently answering questions via email at gene@marksgroup.net. We encourage you to reach out!

    • David Arthur | May 6, 2020 at 10:27 pm

      We never even got help

    • David Arthur | May 6, 2020 at 10:27 pm

      We never even got help, and we needed it

    • David Arthur | May 6, 2020 at 10:28 pm

      We never even got help, and we needed it. A lot of mom and pop stores in our area didn’t receive help.

    • nuris flores | May 6, 2020 at 10:30 pm

      How do I apply

      • Small Biz Ahead Staff | May 7, 2020 at 3:36 pm

        Hi Nuris – You take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation.

    • Georgina Williams | May 6, 2020 at 10:31 pm

      I am in need of funds, please email an application or contact information.
      Thank you

    • JOHN EDWARDS | May 6, 2020 at 10:31 pm

      Are independent contractors included in this credit for the business? We have vendor contracts that are postponed but remain enforceable once the crisis is contained. Our contractors were not paid for the work they would have done in March and April and may not get paid without support.

      • Small Biz Ahead Staff | May 7, 2020 at 3:29 pm

        Hi John – Independent contractors are eligible. As long as you have employees and you file a quarterly Federal 941 return. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you for reading!

    • John Cowen | May 6, 2020 at 10:36 pm

      I have kept 3 employees on my payroll plus myself (owner) during the pandemic crises. My business income is lower than previous years because my clients have cut back.
      What are the criteria that I need to know to see if I qualify? And how do I go about qualifying to the govt? Or who else do I apply to?

      • Small Biz Ahead Staff | May 7, 2020 at 3:28 pm

        Hi John – Any company of any size is eligible as long as you can prove two things:
        A.) that your business was shutdown or suspended by the government because of the COVID-19 pandemic or
        B.) that your company suffered a more than 50 percent revenue decline during a quarter compared to the corresponding quarter from the prior year. As long as you have employees and you file a quarterly Federal 941 return you can take the credit at the time of filing the return. Thank you!

    • Kevin Sharp | May 6, 2020 at 10:39 pm

      The drop at a typical manufacturing company did not take effect until late March or April. Are they only comparing last year 1st quarter to this years 1st quarter?
      My second quarter will certainly be down over 50% from first quarter.

    • Thu nguyen | May 6, 2020 at 10:40 pm

      I applied for PPP Loan my Payrol last year 2019,is 120860.. but they only give me 3310 .00 I don’t know why can I complain to SBA .. or I give back to them than I can do it over with different bank

    • Jennifer | May 6, 2020 at 10:41 pm

      So I’m assuming this will not apply to sole proprietors who don’t have a payroll – correct?

    • Dr Zina Alathari | May 6, 2020 at 10:44 pm

      I’ll wait for the ppp if not I will apply. Thank you

    • Laura Sheehan barron | May 6, 2020 at 10:46 pm

      How do I apply for the tax credit?

      • Small Biz Ahead Staff | May 7, 2020 at 3:26 pm

        Hi Laura – You take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • marcel vasmachdu | May 6, 2020 at 10:47 pm

      are you sure about this because it doesnt say that in the irs announcement , it just says if you took the ppp then you cant take the credit

    • Lisa | May 6, 2020 at 10:48 pm

      Can you apply for the credit if you received the PPP money but realized it won’t work for you and you pay it back with a few weeks?

      • Small Biz Ahead Staff | May 7, 2020 at 3:46 pm

        Hi Lisa – Please reach out to Gene directly at gene@marksgroup.net for this specific question. He will be responding to questions pertaining to this article via email. Thank you!

    • Steven Katz | May 6, 2020 at 10:49 pm

      Is a sole-proprietorship with no employees eligible for the credit? All of my contracts are being cancelled.

      • Small Biz Ahead Staff | May 7, 2020 at 3:18 pm

        Hi Steven – You must have employees to be eligible for this credit. This is the Employee Retention Tax Credit, sometimes called the Payroll Tax Credit. Gene has clarified in section 1 of this article. Thank you!

    • Victoria | May 6, 2020 at 10:49 pm

      Good

    • Nadeem Hashmi | May 6, 2020 at 10:51 pm

      Can the small business take payroll tax credit now while it is under review in congress?

      • Small Biz Ahead Staff | May 7, 2020 at 3:48 pm

        Hi Nadeem – We encourage you to reach out to Gene directly at gene@marksgroup.net about this specific question. He will be responding to questions pertaining to this article via email. Thank you!

    • Mike Caraynoff | May 6, 2020 at 10:53 pm

      An exciting opportunity

    • Dana lee | May 6, 2020 at 10:56 pm

      We like to learn more

    • Pablo garza | May 6, 2020 at 11:00 pm

      I need More information in spanish

    • Deborah Collins | May 6, 2020 at 11:01 pm

      Thank you very much for posting this. I feel like this credit was dwarfed by the PPP and have been looking for the answer regarding the eligibility up until the PPP funds are received.
      My other question is – Can someone who was completely shut down, causing employees to go on unemployment, bring them back and utilize this credit or have they ruined their eligibility by laying the employees off? Thank you again. Good article. Deb

      • Chloe Silverman | May 7, 2020 at 3:15 pm

        Hi Deborah – Thank you for reading! Gene is answering questions pertaining to this article via email at gene@marksgroup.net. We encourage you to reach out with your question.

    • Eric Blackledge | May 6, 2020 at 11:04 pm

      Are you sure that the credit is up $5000 ( for $10,000) in payroll for “each” quarter. I read the legislation as up to a $5000 credit per employee for all of the qualified quarters during the credit period up to 12-31-20.

    • Nathan Britt | May 6, 2020 at 11:05 pm

      What if we use our funds correctly for the PPP program and then they run out? We have to use them in 8 weeks then we are responsible for keeping them paid out of our pocket or lay them off? I am just not sure how all of this works. I get new info thrown at me every day.

      • Chloe Silverman | May 7, 2020 at 3:38 pm

        Hi Nathan – We encourage you to reach out to Gene directly with any specific questions you have. You can email him at gene@marksgroup.net. Thank you for reading!

    • Dick Webb | May 6, 2020 at 11:08 pm

      Does this apply to independent contractors? I have not received the PPP or my stimulus money to date.

      • Small Biz Ahead Staff | May 7, 2020 at 3:12 pm

        Hi Dick – Yes, as long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Srin g | May 6, 2020 at 11:14 pm

      Hi,
      All our employees are hourly basis and our business loss in April and May is 70% loss and hourly employees didn’t work. We have received ppp loan. How do we use this money.

    • Kim Shufran | May 6, 2020 at 11:20 pm

      What is the process and how do I apply for this tax credit? I am the executive director of a nonprofit.
      Thanks

      • Small Biz Ahead Staff | May 7, 2020 at 3:13 pm

        Hi Kim – You take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Pleaes reach out to Gene at gene@marksgroup.net for any other questions you have pertaining to this article. Thank you!

    • Masako Hoshi | May 6, 2020 at 11:24 pm

      Thank you for the valuable information.

    • Pat | May 6, 2020 at 11:25 pm

      If you received PPP funds on April 20 can you retroactively receive the payroll tax credit for any period of time prior to that and if so what period?

      • Chloe Silverman | May 7, 2020 at 3:40 pm

        Hello! We encourage you to reach out to Gene directly with this specific question. You can email him at gene@marksgroup.net. Thank you!

    • N. Nanayakkara | May 6, 2020 at 11:32 pm

      Can a small pre school which is a corporation take payroll tax credits?

      • Small Biz Ahead Staff | May 7, 2020 at 3:03 pm

        Hello! Yes, as long as you have employees and you file a quarterly Federal 941 return. Thank you for reading!

    • peacepestcontrol | May 6, 2020 at 11:33 pm

      my business has been slow

    • Linda | May 6, 2020 at 11:35 pm

      If approved for a PPP loan but decide to decline the funds or end up returning all the funds back to the SBA, can a business still qualify for the payroll tax credits? Secondly, my business received the $10K EIDL advance grant. Would this affect our payroll tax credits eligibility?

      • Small Biz Ahead Staff | May 7, 2020 at 3:50 pm

        Hi Linda – Thank you for reaching out. We encourage you to reach out to Gene directly at gene@marksgroup.net about these specific questions. He will be responding to questions pertaining to this article via email.

    • Confused | May 6, 2020 at 11:41 pm

      My understanding is that the tax credit is up to $5,000 per employee per year – not per employee per quarter (potentially $20,000). Can you confirm?

    • Renee Friedman | May 6, 2020 at 11:44 pm

      Therefore, if I received the PPP on 4/14 then I can take it for the payroll(s) in March?

    • Mary long | May 6, 2020 at 11:47 pm

      Can you apply as a sole with oneself as only employee?

    • Sid Kritzstein | May 6, 2020 at 11:53 pm

      Say you had the IRS advance you $50,000 (10 employees x $5000 each) towards wages paid between March 12, 2020 and Jan 1st 2021. But you had only $8,000 in employer tax credits in 2020, do you need to return the overpayment ($42,000) or do you just apply future employer taxes against the advance you took so you would get the entire $50,000?
      And can you use that $50,000 in any fashion?

      • Chloe Silverman | May 7, 2020 at 3:08 pm

        Hi Sid – Please reach out to Gene with this question. He’s currently responding to emails pertaining to this article at gene@marksgroup.net. Thank you!

    • Elizabeth martinez | May 6, 2020 at 11:58 pm

      How do you sign up for the payroll tax credit

      • Small Biz Ahead Staff | May 7, 2020 at 3:05 pm

        Hi Elizabeth – You take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Chris Chicoine | May 7, 2020 at 12:21 am

      i received a PPP loan that provides funds for payroll from April 15th thru June 12. However, my business closed on March 16th a full month before i received any PPP funds. Can I apply for either the Familys First Benefit or the Payroll Tax Credit to cover any of the “uncovered” payroll prior to when my PPP loan was funded on APril 15th. i have received contradictory answers to this question.

      • Chloe Silverman | May 7, 2020 at 3:05 pm

        Hi Chris – We encourage you to reach out to Gene directly for this question. You can send him an email at gene@marksgroup.net. Thank you for reading!

    • fs | May 7, 2020 at 12:24 am

      Check your facts!

      Are you sure the $5,000 credit is for each quarter? sounds like it’s $5,000 per employee

    • Allan Marinelli | May 7, 2020 at 12:48 am

      Hi

      How about if I am a Corporation, and that I gave myself a wage as a W2 employee of my company but then the Corporation does not receive any other income months later to pay for the one employee myself, can I apply for this?

      • Chloe Silverman | May 7, 2020 at 3:06 pm

        Hi Allan – Please reach out to Gene with this question. He’s currently responding to emails pertaining to this article at gene@marksgroup.net. Thank you!

    • Arunee | May 7, 2020 at 1:09 am

      I applied for PPP got denied , would I be qualify payroll Tax credit program?

    • Julio Guadamuz | May 7, 2020 at 1:47 am

      I have kept my employee work paid but not enough income because of material Supply her close and only on line we took a big lost o the income so how I can apply for a loan ?

      • Small Biz Ahead Staff | May 7, 2020 at 2:59 pm

        Hi Julio – As mentioned in the article above, your business is eligible for this tax credit if it can prove two things: 1.) that your business was shutdown or suspended by the government because of the COVID-19 pandemic or 2.) that your company suffered a more than 50 percent revenue decline during a quarter compared to the corresponding quarter from the prior year. It’s a credit against the employer’s share of FICA (6.2 percent) owed on your quarterly payroll. There’s no need to apply. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Sam | May 7, 2020 at 1:56 am

      Can I receive this credit if my business received an EIDL loan?

      • Small Biz Ahead Staff | May 7, 2020 at 3:50 pm

        Hi Sam – Please reach out to Gene directly at gene@marksgroup.net about this specific question. He will be responding to questions pertaining to this article via email. Thank you!

    • Nancy Aharon | May 7, 2020 at 2:05 am

      I AM EVEN MORE CONFUSED AFTER READING. ALL MY EMPLOYEES FILED FOR UNEMPLOYMENT. IM SELF EMPLOYED AS A DENTIST AND HAVE BEEN QUARANTINED SINCE MAR 11,2020 WHEN I GOT SICK. I DIDNT GET TESTED FOR COVID BUT MY DR TOLD ME TO STAY HOME AND THEN EVERYONE ELSE GOT QUARANTINED. NO UNEMPLOYMENT AS OF YET. IVE APPLIED FOR PPP BUT HAVENT RECEIVED ANYTHING YET. WHAT AM I ELIGIBLE TO APPLY FOR AND HOW? THANKS

      • Chloe Silverman | May 7, 2020 at 2:57 pm

        Hi Mary – Gene is answering questions via email at gene@marksgroup.net. We encourage you to reach out for any questions you may have pertaining to this article. Thank you!

    • Thanh | May 7, 2020 at 5:34 am

      Do I qualify for any federal release program if I own rental properties
      And Tenants not paying rent ? Because their business is close

      • Chloe Silverman | May 7, 2020 at 3:40 pm

        Hello! We encourage you to reach out to Gene directly with this specific question. You can email him at gene@marksgroup.net. Thank you!

    • Mary | May 7, 2020 at 5:37 am

      I am a business owner that works for my self but I do receive a paycheck every two weeks and have not received anything from PPP am I eligible to apply for this loan.

      • Chloe Silverman | May 7, 2020 at 2:55 pm

        Hi Mary – Gene has updated this article and answered this question in the first two sections of this article. Thank you!

    • Martha Price | May 7, 2020 at 5:55 am

      Since PPP is a loan, can I return the money and then use the tax credits if I do not keep it?

    • Mohammad Rizwan | May 7, 2020 at 6:22 am

      Thank you. Let me know about all tax credits. Didn’t get my ppp. 🙁

    • Jacqueline Beck | May 7, 2020 at 6:57 am

      Our company paid salaries for 2 weeks to our employees when the state said non-essential businesses must quarantine workers, and their jobs were not ones that could be “work from home”.
      Our payroll service said between the time period of March 23-March 31st, paying employees should be listed as PTO (personal time off).
      Not until April 1st did payroll service said any paid time off is then classified as Covid-SickEE,
      and so our employees show being paid under this classification from 4/1 -4/3

      So my question is, because of the way the payroll service said time paid needed to be coded, would we only be able to get the payroll tax credit for that portion that was from 4/1-4/3, even though we were paying employees to be home before that because of the quarantine?

    • John Kolesar | May 7, 2020 at 7:06 am

      Good info for small businesses.

    • Frederik Harboe | May 7, 2020 at 7:07 am

      If I am the sole employee of my own S Corp, (though I share ownership with my wife 49%+51% shares) am I considered “self employed?”

    • Steve Pryor | May 7, 2020 at 7:08 am

      We have received a PPP loan, but have chosen not to use it due to the ambiguity regarding the forgiveness portion. If we gave the loan back in full, would we then be eligible for the Payroll Tax Credit?

      • Small Biz Ahead Staff | May 7, 2020 at 3:54 pm

        Hi Steve – This question is answered in section 2 of this article. If you feel that your question was not answered in the article, feel free to reach out to Gene at Gene@marksgroup.net for any specific questions you may have related to this. Thank you!

    • Anh Nguyen | May 7, 2020 at 7:12 am

      Can the tax credit be applied after the 8 weeks after PPP loan is attained? If the PPP loan is not used can the tax credit be applied?

      • Chloe Silverman | May 7, 2020 at 3:22 pm

        Hi Anh – Gene addresses this question in section 2 of this article. For more specific questions pertaining to this article, please email Gene at gene@marksgroup.net. Thank you!

    • Roberto Flores | May 7, 2020 at 7:19 am

      Do I qualify for this Credit thank you

    • Paul Romanoski | May 7, 2020 at 7:20 am

      I am a sole proprietor LLC. I pay estimated quarterly taxes. I do not file a payroll return as it is not payroll as is required for subchapter S company. Does that mean I’m out of luck on this?

      • Small Biz Ahead Staff | May 7, 2020 at 2:41 pm

        Hi Paul – As long as you have employees and you file a quarterly Federal 941 return. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Frank | May 7, 2020 at 7:34 am

      Thank you. I will check with my accountant

    • Adam | May 7, 2020 at 7:34 am

      I like to Apply for a Sba loan for a small business

    • Larry w | May 7, 2020 at 7:40 am

      What is you received the PPP but return it? This program which was not promoted anywhere is actually much better for me.

      • Small Biz Ahead Staff | May 7, 2020 at 2:07 pm

        Hi Larry – The credit is intended to provide additional subsidies to help employers maintain payroll levels, you can not apply for it if you’ve already opted in to the Paycheck Protection Program. See the information provided in #2 for more information. Thank you for reading!

    • Annette | May 7, 2020 at 7:42 am

      If a company returns the PPP loan funds due to the changes that make this program less beneficial, could they then take the payroll tax credit?

      • Chloe Silverman | May 7, 2020 at 3:23 pm

        Hi Annette – This question is addressed in section 2 of this article. For more specific questions pertaining to this article, please email Gene at gene@marksgroup.net. Thank you!

    • Tina | May 7, 2020 at 7:46 am

      I was wondering how you record that you are reducing your taxes on your Form 941? My Form 941 said that I owe so I’m hoping that I will not be penalized? Also you mentioned that you can reduce your healthcare premium. Is the deduction with your healthcare provider since our healthcare is tax exempt? Who do I contact?

    • Michael Aprea | May 7, 2020 at 7:51 am

      I am the owner of an S corp wit one employee, me. Can I apply for this?
      Thanks,
      Michael

      • Small Biz Ahead Staff | May 7, 2020 at 2:04 pm

        Hi Michael – Yes, Gene has updated the article today to address this…As long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you for reading!

    • Guilherme Valverde | May 7, 2020 at 8:02 am

      I applied for the PPP and received the funds. However I am sitting on the money as a lot of small business owners. If I return the PPP money, am I still eligible to apply for the payroll tax credit program? Thanks

      • Chloe Silverman | May 7, 2020 at 2:03 pm

        Hi Guilherme – Gene has addressed this question in #2 of this article. The article has also been updated with additional information. Thank you for reading!

    • Michele Zimmer | May 7, 2020 at 8:05 am

      If you received a PPP loan but decided you don’t want it because your business is still in a government ordered shut down – can you return the loan in full (before the 5/14 safe harbor date) and then take the ERC?

    • Tom kupec | May 7, 2020 at 8:13 am

      Can a business take this tax credit if they received disaster relief loan?

    • Jerry Wright | May 7, 2020 at 8:17 am

      Our church could not have traditional services due to orders regarding groups of more than 10. However, we have live-streamed weekly services and daily devotionals and music. Does this meet the “shut down” requirement?

      • Chloe Silverman | May 7, 2020 at 2:51 pm

        Hi Jerry – Great question! Gene is currently answering specific questions like this via email. Please reach out to gene@marksgroup.net. Thank you!

    • Tammy Land | May 7, 2020 at 8:39 am

      We are a 501 c 6…non profit association. Are we eligible?

      • Chloe Silverman | May 7, 2020 at 2:34 pm

        Hi Tammy – Gene explains eligibility in section 1 of this article and has been updated with more information today. For more specific business questions, please reach out to Gene via email gene@marksgroup.net. Thank you!

    • Sharon Sobon | May 7, 2020 at 9:06 am

      How do I apply for the payroll tax credit?

      • Small Biz Ahead Staff | May 7, 2020 at 2:18 pm

        Hi Sharon – Gene addresses this question within the article and has updated the article with more information today. Thank you for reading!

    • Michelle ABell | May 7, 2020 at 9:33 am

      Can you take a payroll tax credit for quarters after you have received the PPP funds and used them appropriately?

      • Chloe Silverman | May 7, 2020 at 2:02 pm

        Hi Michelle – Gene has addressed this question in #2 of this article. The article has also been updated with additional information. Thank you for reading!

    • Lloyd George | May 7, 2020 at 9:37 am

      If I calculate my self-employment tax annually via Schedule C, but pay a combined lump sum quarterly with my estimates, will the 2020 Schedule C form provide a mechanism for me to credit the SE tax at that point?

      • Chloe Silverman | May 7, 2020 at 3:41 pm

        Hi Lloyd – Please reach out to Gene directly with this specific question. You can email him at gene@marksgroup.net. Thank you!

    • Kenneth Klonsky | May 7, 2020 at 9:40 am

      Would like to know the answer to Michele Zimmer’s question

    • Jean Beuning | May 7, 2020 at 9:42 am

      What happens if I have a PPP loan, that runs out end of June, and revenue is still greatly impacted, which would mean I would again have to furlough staff. Can I then use the payroll tax credits on wages starting in July to keep employees working?

      • Chloe Silverman | May 7, 2020 at 2:01 pm

        Hi Jean – Gene has addressed this question in #2 of this article. The article has also been updated with additional information. Thank you for reading!

    • Danny Berman | May 7, 2020 at 9:42 am

      Gene, do you know how this will be reported on Form 941? I have not seen any revision to the form or its instructions. Thank you.

      • Small Biz Ahead Staff | May 7, 2020 at 2:09 pm

        Hi Danny – Gene addresses your question in #8 of the article. As long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Dorothy | May 7, 2020 at 9:54 am

      Can a business take the payroll tax credits after PPP loan funds are exhausted and/or past the 8 weeks?

      • Small Biz Ahead Staff | May 7, 2020 at 2:13 pm

        Hi Dorothy – Gene has updated the article to address this common question! The credit only applies if you don’t take money from the PPP. Please see sections #1 and #2 for a more detailed answer. Thank you!

    • Elisa Fernandez | May 7, 2020 at 10:04 am

      If our banquet business was completely shut down on March 13th and we remain closed, are we still considered affected by the COVID 19 …..in other words does it have to be affected a full quarter? (we may have not lost 50% of our business in 1st qtr, but do I have to wait to see if we lose 50% of our business Apr-Jun to start taking advantage of this credit?

      • Small Biz Ahead Staff | May 7, 2020 at 2:50 pm

        Hi Elisa – Due to a high volume of specific business questions on this article, Gene is currently answering questions via email at gene@marksgroup.net. We encourage you to reach out! Thank you for reading.

    • David Goldstein | May 7, 2020 at 10:26 am

      The IRS has published an extensive FAQ list related to the Employee Retention Credit. In particular, note FAQ #59 regarding “Are wages paid by an employer to employees who are related individuals considered qualified wages?”.

      The response is:

      No. Wages paid to related individuals, as defined by section 51(i)(1) of the Internal Revenue Code (the “Code”), are not taken into account for purposes of the Employee Retention Credit. A related individual is any employee who has of any of the following relationships to the employee’s employer who is an individual:

      – A child or a descendant of a child;
      – A brother, sister, stepbrother, or stepsister;
      – The father or mother, or an ancestor of either;
      – A stepfather or stepmother;
      – A niece or nephew;
      – An aunt or uncle;
      – A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

      In addition, if the Eligible Employer is a corporation, then a related individual is any person that bears a relationship described above with an individual owning, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation.

      If the Eligible Employer is an entity other than a corporation, then a related individual is any person that bears a relationship described above with an individual owning, directly or indirectly, more than 50 percent of the capital and profits interests in the entity.

      If the Eligible Employer is an estate or trust, then a related individual includes a grantor, beneficiary, or fiduciary of the estate or trust, or any person that bears a relationship described above with an individual who is a grantor, beneficiary, or fiduciary of the estate or trust.

    • Pam Sparks | May 7, 2020 at 10:26 am

      We are a Non-Profit 501 (c) (6) a Chamber of Commerce. Can we take advantage of this tax credit?

      • Small Biz Ahead Staff | May 7, 2020 at 3:20 pm

        Hi Pam – Yes, non-profits do qualify for this tax credit.

    • Terri O'Connor | May 7, 2020 at 10:50 am

      We are a sole Proprietor with employees from time to time. If we hired someone but could not start them on their start date because of C-19 can we start their employment and qualify?

      • Chloe Silverman | May 7, 2020 at 1:59 pm

        Hi Terri – Gene has added more information to this article to answer your question. Thank you for reading!

    • Vipul Doshi | May 7, 2020 at 10:50 am

      Can A business get payroll tax credit if loan is refunded in a month of receiving the loan since it is always beneficial to take tax credit instead of loan ( even though 25 percent may be be waived) .

      Most of the restaurant, hotel , service provider small shops business owner can meet 1st and 2nd qtr.’20. and they may have paid some employees for carry out business.
      a. To be eligible for the credit, you must demonstrate that either your business had to shut down during a payroll quarter because of the pandemic (as a result of a government order), or that your business suffered a 50% or greater loss of revenue during the quarter when compared to the previous year.

      • Chloe Silverman | May 7, 2020 at 2:39 pm

        Hi Vipul – Gene is currently replying to specific business related questions via email at gene@marksgroup.net. Please reach out to him with your questions. Thank you for reading!

    • Helen Trisko | May 7, 2020 at 11:01 am

      Thank you for your help.

    • Matthew Miller | May 7, 2020 at 11:04 am

      How do you apply for this credit?

    • Garrett Thurber | May 7, 2020 at 11:09 am

      Thank you for this beneficial information.

    • Lila J | May 7, 2020 at 11:11 am

      The PPP loan is to be distributed over 8 weeks from funding. If we accepted the PPP loan and if after 8 weeks, the business is still impacted, can it apply for the payroll tax credit from that point on?

      • Chloe Silverman | May 7, 2020 at 2:36 pm

        Hi Lila – Gene has addressed this common question in section 2 of this article. Thank you!

    • Marwan Bassil | May 7, 2020 at 11:20 am

      What if i already got funded by PPP but have not used the funds,Can i return the PPP funds and apply for the payroll tax credit.
      Thank you

      • Chloe Silverman | May 7, 2020 at 3:39 pm

        Hi Marwan – We encourage you to reach out to Gene directly with this specific question. You can email him at gene@marksgroup.net. Thank you for reading!

    • Mark McCarty | May 7, 2020 at 11:24 am

      Gene: From the IRS Website: An employer may not receive the Employee Retention Credit if the employer receives a PPP loan that is authorized under the CARES Act. An Eligible Employer that receives a PPP loan, regardless of the date of the loan, cannot claim the Employee Retention Credit.

    • Kathie Kearley-Green | May 7, 2020 at 11:29 am

      If a business returns their ppp loan and cancels it because it doesn’t work for their business (business shutdown by order of state or local government) can they then participate in the employee retention credit?

    • Tomiko | May 7, 2020 at 11:43 am

      How do you apply this payroll tax credit? Is there a new 941 form to file?

      • Small Biz Ahead Staff | May 7, 2020 at 2:21 pm

        Hi Tomiko – Thank you for your question! Gene has addressed this common question in the article above. You will take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation.

    • Qunyun Sears | May 7, 2020 at 12:11 pm

      I want to apply for the SBA loan but don’t how or where to apply

      • Small Biz Ahead Staff | May 7, 2020 at 2:31 pm

        Hi Qunyun – Gene has updated this article today for more clarification on this common question. The 2020 Payroll Tax Credit is not a loan. It’s a credit against the employer’s share of FICA (6.2 percent) owed on your quarterly payroll. There is no need to apply, you will take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation. Thank you!

    • Felicia Langford | May 7, 2020 at 12:16 pm

      Hello, I would like to know more about the small buisness loans for payroll

    • Lise Cummings | May 7, 2020 at 12:18 pm

      What if your business started late last year – i.e. you have no last year quarter to compare to re whether business is down 50% or more? P.S. thank you for this article – it was very clear.

      • Chloe Silverman | May 7, 2020 at 2:29 pm

        Hi Lise – Gene is currently replying to specific business related questions via email at gene@marksgroup.net. Thank you for reading!

    • Kimberly Landecker | May 7, 2020 at 12:20 pm

      Does this apply to sole proprietors or contract workers at all? Thank you!

      Kim

      • Small Biz Ahead Staff | May 7, 2020 at 2:20 pm

        Hi Kim – Yes, as long as you have employees and you file a quarterly Federal 941 return. There’s no need to apply though. You just take the credit at the time of filing the return. A new 941 return will have a new line on it for you to do the calculation.

    • Lynn Barnhardt | May 7, 2020 at 12:21 pm

      Are you sure about the $5K per employee quarter maximum? The IRS website makes it sound like it is a $5K maximum per employee for the entire year.

    • Jorge coyoy | May 7, 2020 at 12:28 pm

      What is the help I can get I’m really small company, and how can apply for it.

      • Small Biz Ahead Staff | May 7, 2020 at 2:28 pm

        Hi Jorge – Any company of any size is eligible as long as you can prove two things:
        A. that your business was shutdown or suspended by the government because of the CV-19 pandemic or
        B. that your company suffered a more than 50 percent revenue decline during a quarter compared to the corresponding quarter from the prior year.

    • Lisa | May 7, 2020 at 12:36 pm

      Can you do the payroll tax credit after the payroll protection plan is completed? ( after the 8 weeks )

    • franco cacace | May 7, 2020 at 1:19 pm

      If my buisness got the ppp loan for $52,000.00 and also got the $10,000.00 sba disaster loan ,
      should I notify any of the lenders that I got the loans and would both loans be forgiven, thank you.

    • Ed | May 7, 2020 at 1:21 pm

      As a single owner of an LLC Consulting firm, would I get any advantage from this tax credit? I pay a salary to myself. Thanks!

      • Chloe Silverman | May 7, 2020 at 2:27 pm

        Hi Ed – Great question! Gene has updated the article to address this. For any specific business related questions, please reach out to Gene at gene@marksgroup.net. Thank you!

    • David Hnath | May 7, 2020 at 1:21 pm

      Can you take this credit if you received the EIDL no questions asked $10k advance?

      • Small Biz Ahead Staff | May 7, 2020 at 2:48 pm

        Hi David – Due to a high volume of specific business questions on this article, Gene is currently answering questions via email at gene@marksgroup.net. We encourage you to reach out! Thank you for reading.

    • Jerry Hannah | May 7, 2020 at 2:02 pm

      I have not received any funding

    • Sal Versaggi | May 7, 2020 at 2:11 pm

      I was not aware of this program.

    • John | May 7, 2020 at 2:50 pm

      I received 6k initial EIDL funding and I received PPP funding for my small business. I heard there is low interest loan funding available through the SBA but I’ve been unable to find out any information about this. Can you help me find out if this is true and if so, where/how to apply?

      • Chloe Silverman | May 7, 2020 at 3:02 pm

        Hi John – Gene has been answering specific questions pertaining to this article via email at gene@marksgroup.net. Thank you!

    • Oscar Tellez | May 7, 2020 at 2:54 pm

      I was not aware of this program before ppp

    • John Madeira | May 7, 2020 at 3:13 pm

      You referred to disaster loans being available. Where/how do I apply for a low interest disaster loan?

      • Chloe Silverman | May 7, 2020 at 3:24 pm

        Hi John – Please reach out to Gene at gene@marksgroup.net for more information on this question. Thank you!

    • Gloria & Eugene Parker | May 7, 2020 at 3:28 pm

      Hi, my husband has his own cleaning service for commercial building, and all our business has been closed down due to the building have been shut down. I he had one worker but with us only for a month before this virus hit, but she had other jobs as well she was working part time with before us. My husband only takes a drawal for himself. He was not eligible for the paycheck program. Would he be able to get a tax credit, since all of our building has been closed and we haven’t had any money coming in like we have been. We have one building we have been cleaning twice a week, and one that we go and just do comment area’s due to the everyone has been close except a couple office, which we don’t go in right know because they have asked for not to until this building is back up and running. Is there anything we can file to get help for out company.

      Gloria

      • Small Biz Ahead Staff | May 7, 2020 at 3:45 pm

        Hi Gloria – Gene answers this question in sections 1, 2, and 4 of this article. Any company of any size is eligible as long as you can prove two things: A.) that your business was shutdown or suspended by the government because of the COVID-19 pandemic or
        B.) that your company suffered a more than 50 percent revenue decline during a quarter compared to the corresponding quarter from the prior year. As long as you have employees and you file a quarterly Federal 941 return, you can take the credit at the time of filing the return. Please reach out to Gene at gene@marksgroup.net for any specific business questions you may have pertaining to this article. Thank you!

    • Jane Dodd | May 7, 2020 at 6:17 pm

      We are slightly confused in doing research on the IRS site, etc. I understand the maximum credit per employee you can receive is $5,000 in a quarter, but for the entire time frame ending December 31, 2020, is it just $5,000 total per employee or $15,000 (if you count the 3 quarters of the year, $5,000 x 3 = $15000). On the IRS site it just says $5,000 and it doesn’t really say clearly if that’s for the year maximum, quarter maximum, or both!

    • Lawrence Lewis | May 8, 2020 at 9:18 am

      I already filed the 941 for Quarter one which includes the period in march. How do I include that as that 941 did not have the credit on it. Or, if it did, I did not see it. Can I amend if it was there? and if it was not present, how do I include part of March?

    • Curtis Williams | May 9, 2020 at 8:57 am

      I need help. I have not been able to get any funds from any source.

    • TL Livermore | May 11, 2020 at 2:25 pm

      You cannot use the tax credit with the PPP. I do not know what happens if you give PPP money back without using it. At a guess, as long as you have written proof of having returned it unused, you ought to be eligible for the ERC. There are currently no EIDL funds available unless you perhaps were already in the queue (maybe) or have an ag-related business.

      To use the ERC, you start by hanging on to funds you normally pay for your 941 by May 15. If your request for funds is going to be greater than your tax payment, which of course it is, you fill out and fax in a Form 7200.

      The first quarter 941 is not eligible, but wages paid March 13-31 are. You just attach them as part of your April 941 payment (or withheld payment, in this case). I have not yet seen a revised 941, but you don’t have to wait that long.

      However, as a caveat, I faxed in my first Form 7200 (you can file several times) over two weeks ago, and have not yet received a check or any other information from the IRS, so at this point I’m under the assumption that it’s going to work every bit as poorly as everything else has so far. The one thing you can do, short-term, is hang onto the money you would otherwise send to the IRS as a 941 payment.

      My reading of the instructions, and that’s all this is, suggests you can use the entire tax payment and not just the employer’s portion of Social Security. That’s where you’re supposed to start, then move onto the rest of the payment, then request a refund.

      And it is $5,000 per employee for the year, not per quarter. Your business has to either have been completely or partially shut down due to covid-19, or your income down 50% for the quarter. Once it drops to that level, it can go back up to 80% of last year’s income before you are no longer eligible for the credit.

      All of this information can been found starting here: https://www.irs.gov/coronavirus/new-employer-tax-credits.

    • R Marsh | July 27, 2020 at 10:09 am

      Filed form 7200 last week. Trying to understand from others that have filed how long you have seen it take to get your refund? Aside from the fax #, IRS offers no other contact information where you can call and check. Thanks for any thoughts you can share.

Leave a Reply

Disclaimer: Comments are subject to moderation and removal without cause or justification and may take up to 24 hours to be seen in comments. Your email address will not be published. Required fields are marked * Please do not include personal policy information; if you have questions or concerns regarding your policy with The Hartford, please log into your account or you can speak directly to a Customer Service Representative.