IRS Adds Note to Form 941 for Employee Retention Credit
On April 3, the IRS added a note to the Form 941, Employer’s Quarterly Federal Tax Return, and its instructions to provide guidance to employers that will claim the employee retention credit. The employee retention credit was created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to support employers that operate a business during 2020 and retain their employees, despite experiencing economic hardship related to the COVID-19 crisis.
The employee retention credit is a refundable tax credit equal to 50% of qualified wages paid to employees after March 12, 2020, and before January 1, 2021. Eligible employers that paid any qualified wages between March 13, 2020, and March 31, 2020, will include 50% of those wages together with 50% of any qualified wages paid during the second quarter of 2020 on their second quarter Form 941 to claim the employee retention credit. The credit should not be included on the first quarter Form 941.
The IRS created FAQs on the employee retention credit.
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Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Payroll Information Resources for the APA.