The CARES Act provides credit to eligible businesses with 50% of the qualified wages.
The qualified wage is defined as
- Compensation to employees from the period of March 12, 2020 to December 31, 2020.
- Compensation is up to $10,000 per employee
That means the credit is up to $5,000 ($10,000 * 50%) per employee!
Which business is eligible for?
- The business is not running as a sole proprietorship.
- The business is affected by COVID-19 financially
- The business does not have loan(s) from SBA under CARES Act (loans such as Economic Injury Disaster Loan and PPP loans); Sorry, no double-dipping!
Also, the qualifying employers must fall into one of the following categories:
- The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter; or
- The employer’s gross receipts are below 50% of the comparable quarter in 2019.
How to Receive the credit?
The employer can either take the money from the payroll tax liabilities which would have been paid otherwise or file form 7200 to apply for the credit.
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