President Joe Biden offered updates on the state of the economy yesterday after a very disappointing jobs report that brought in only 266,000 non-farm payroll jobs instead of the expected 1 million.
He highlighted certain steps the White House was taking to boost job growth in the near future and of particular interest were his comments on the expansions of the employee retention tax credit.
Biden commented that under the American Rescue Plan employees can be hired back part-time without losing unemployment benefits. A fact sheet released by the White House expanded on this, indicating that this year the tax credit offers employers with 500 or fewer employees a tax credit of “70 percent of the first $10,000 in wages per employee per quarter.”
The credit is refundable and advanceable and will cover up to $7,000 in wages per quarter for each employee, the fact sheet noted. The amount of the tax credit can be applied against a retailer’s quarterly federal payroll tax amount. The fact sheet also states that if the total liability for the quarter was in excess, those monies could be advanced or paid by the government directly to the employer.
The administration suggested that these advances could be used to rehire workers, raise wages, improve facilities and purchase new inventory.
So far, more than 30,000 small businesses have already taken advantage of the tax credit, claiming more than $1 billion in credits this year. In order to raise awareness and boost participation in the program, the Treasury Department this week will “disseminate clear and concise steps on how businesses can determine their eligibility and claim the ERC.”
Ideally, credits like these will incentivize workers to return to work sooner and keep them employed as the economic recovery continues.
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