Credit unions can explore expanded employee retention credit

Credit unions that retained employees during the COVID-19 pandemic may want to consider exploring the employee retention credit, also known as the ERC, which was recently extended and expanded.

The ERC, originally authorized under the CARES Act in March 2020 providing refundable tax credits to employers struggling due to the pandemic, was extended as a result of the Consolidated Appropriations Act of 2021 and the American Rescue Plan.

The availability of the ERC for small businesses has now been extended through December 2021 and allows businesses to offset their current payroll tax liabilities by up to $7,000 per employee per quarter, according to the U.S. Treasury. This credit of up to $28,000 per employee for 2021 is available to small businesses who have seen their revenues decline or even been temporarily shuttered due to COVID.

Extended through September 2021 is the availability of paid leave credits for small and mid-size businesses that offer paid leave to employees who may take leave due to illness, quarantine or caregiving, according to the U.S. Treasury. Businesses can take dollar-for-dollar tax credits equal to wages of up to $5,000 if they offer paid leave to employees who are sick or quarantining, according to the agency.

Also, employers may utilize the SBA’s Paycheck Protection Program and claim the ERC. This part of the new law is retroactive, allowing PPP recipients to retroactively claim the ERC.

Credit unions interested in exploring the ERC are strongly encouraged to consult with a tax and accounting professional to determine whether they qualify for such credits.

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