Payroll Tax Provisions Breakdown
Employee Retention Credit
Refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by employers during the coronavirus crisis.
Available to Employers:
- Whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or
- Whose quarterly receipts are less than 50% for the same quarter in the prior year.
To prevent double dipping, employers that receive Small Business interruption loans are not eligible for the credit. Additionally, wages that qualify for the emergency paid leave credit (FFCRA) are not eligible for the credit. The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.
Social Security Tax Deferment
Allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees.
Note: Employers generally are responsible for paying a 6.2-percent Social Security tax on employee wages. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by Dec. 31, 2021 and the other half by Dec. 31, 2022.
Section 3606. Advance Refunding of Credits
- Allows employers to receive an advance tax credit from Treasury instead of having to be reimbursed on the back end. Creates regulatory authority to implement the tax credit advances.
- These tax provisions relate to payroll. There are several other tax provisions and incentives in the CARES Act. Upon Presidential execution, please see your tax professional.
NOTE: This presentation/information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.