Another massive change for companies in the new stimulus bill is that companies will be able to take advantage of both PPP loans and the employee retention tax credit (ERTC). It also greatly expands the ERTC in 2021, with the new ERTC credit offering a maximum of $14,000 per employee through June 30, 2021.
Originally, the CARES Act only allowed businesses to choose PPP or ERTC. U.S. Chamber of Commerce Vice President Neil Bradley notes that businesses should take these major changes into account for year-end tax planning purposes and start using it to help them plan out 2021. If a business used and exhausted a PPP loan early in 2020, for example, they could then use the ERTC to help them with their 2020 taxes.
“A lot of small businesses may not have taken advantage of the employee retention tax credit this year because they took a PPP loan,” Bradley said. “You now have the opportunity before the end of the year to claim that tax credit and look back at prior quarters and count those wages.”
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