The COVID-19 pandemic has had a significant impact on businesses and employees alike. To help alleviate some of the financial strain, the US government has implemented several measures, including the Families First Coronavirus Response Act (FFCRA) and the Employee Retention Credit (ERC). While both aim to provide relief to employers and employees, their scope and eligibility criteria differ. We feel there should be a FFCRA vs ERC comparison.

Two scales weighing FFCRA vs ERC, with FFCRA tipping down while ERC rises, symbolizing the comparison between the two employee retention programs

The FFCRA requires certain employers to provide paid sick leave and expanded family and medical leave to employees affected by the pandemic. Employers are then eligible for tax credits to cover the cost of providing this leave. On the other hand, the ERC allows eligible employers to claim a refundable tax credit for a portion of wages paid to employees during the pandemic, even if the employees are not working due to the business being closed or experiencing a significant decline in revenue.

Understanding the differences between FFCRA and ERC is crucial for employers looking to take advantage of the available relief measures. While the FFCRA focuses on providing leave to employees affected by the pandemic, the ERC is aimed at providing financial support to businesses struggling to retain employees. Employers should carefully consider their eligibility for both measures and determine which is more beneficial for their situation.

Understanding FFCRA vs ERC

FFCRA vs ERC computer search

Origins and Purpose of FFCRA

The Families First Coronavirus Response Act (FFCRA) was signed into law in March 2020 to respond to the COVID-19 pandemic. The FFCRA requires certain employers to provide their employees with paid sick leave and expanded family and medical leave for reasons related to COVID-19. The law was intended to provide relief to employees impacted by the pandemic and help slow the spread of the virus.

Origins and Purpose of ERC

The Employee Retention Credit (ERC) was also created as part of the CARES Act in response to the COVID-19 pandemic. The ERC is a refundable tax credit designed to encourage eligible employers to keep their employees on payroll despite experiencing economic hardship related to COVID-19. The credit is available to eligible employers who paid qualified wages to their employees between March 12, 2020, and December 31, 2021.

Eligible Employers
The FFCRA applies to private employers with fewer than 500 employees and certain public employers. The ERC is available to eligible employers of all sizes, including tax-exempt organizations negatively impacted by the pandemic.

FFCRA SETC Tax Credit

Qualified Wages
Under the FFCRA, eligible employees are entitled to up to 80 hours of paid sick leave and up to 12 weeks of expanded family and medical leave. The pay is based on the employee’s regular pay rate, up to a maximum of $511 per day. Conversely, the ERC provides eligible employers with a tax credit of up to 70% of qualified wages paid to employees, up to a maximum of $10,000 per employee per quarter.

Tax Credits
The FFCRA provides employers with a tax credit for providing paid leave to employees. The ERC provides eligible employers a refundable tax credit against certain employment taxes. The credits are designed to help offset the cost of providing paid leave and retaining employees during the pandemic.

2020 and 2021
The FFCRA was effective from April 1, 2020, through December 31, 2020. The ERC was initially available for qualified wages between March 12, 2020, and December 31, 2020. However, the credit was extended through December 31, 2021, by the Consolidated Appropriations Act, 2021.

IRS
The IRS is responsible for administering both the FFCRA and the ERC. Employers can claim the tax credits on their federal employment tax returns.

Overall, the FFCRA and ERC were both created to provide relief to employers and employees impacted by the COVID-19 pandemic. While the FFCRA provides employees with paid leave, the ERC provides eligible employers with a tax credit for retaining their employees during the pandemic.

Comparing FFCRA and ERC Provisions

FFCRA on the rise

Eligibility Requirements

The Families First Coronavirus Response Act (FFCRA) and the Employee Retention Credit (ERC) are two different programs with different eligibility requirements. The FFCRA applies to businesses with fewer than 500 employees, while the ERC applies to businesses of all sizes, including tax-exempt organizations.

Under the FFCRA, eligible employers must provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. On the other hand, under the ERC, eligible employers can receive a refundable tax credit for wages paid to employees during periods of economic hardship caused by COVID-19.

Calculation of Benefits

The calculation of benefits under the FFCRA and ERC also differs. Under the FFCRA, eligible employers must provide employees with up to 80 hours of paid sick leave at the employee’s regular rate of pay, or up to 12 weeks of paid family and medical leave at two-thirds the employee’s regular rate of pay.

Under the ERC, eligible employers can receive a refundable tax credit of up to 70% of qualified wages paid to employees between January 1, 2021, and December 31, 2021. The maximum credit per employee is $28,000 for 2021.

Claiming Procedures

The claiming procedures for the FFCRA and ERC also differ. Under the FFCRA, eligible employers must report their qualified sick leave wages and qualified family leave wages for each quarter on their federal employment tax return, Form 941.

Under the ERC, eligible employers can claim the credit on their federal employment tax return, Form 941, for each quarter or file a Form 7200, Advance Payment of Employer Credits Due to COVID-19, to request an advance credit payment.

Documentation is important for both programs. Employers must keep documentation to support their eligibility for the FFCRA and ERC. The IRS has guided documentation requirements for both programs.

Overall, the FFCRA and ERC are two different programs with different eligibility requirements, calculation of benefits, and claiming procedures. Employers should carefully consider which program is best for their business and seek guidance from the IRS or a tax professional.

Employee Retention Credit With Federal Tax Credits SETC

Have you had difficulties determining if your business qualifies for the Self Employed Tax Credit (SETC)?

Federal Tax Credits ERC

Federal Tax Credits SETC is here to answer any of your questions, offer assistance, and even provide a complimentary SETC Qualification Check.

Our team of SETC Experts offers white glove service for tax filing, amending returns, determining eligibility, and how to file for the SETC Tax Credit.

The time is now to get your Self Employed Tax Credit while the tax credits are still in place. The program is still available but won’t be around for too much longer.

Get the tax credit your business is entitled to and receive game-changing money back to be used for whatever you choose. Remember, this is not a loan and does not need to be paid back.

Contact Federal Tax Credits SETC now, and let us help you receive your business tax cre

Claimed SETC for your business yet?

Your chance to claim as self-employed. See if your business can get money today.

"*" indicates required fields

Name*

Frequently Asked Questions

What are the differences between the FFCRA and the Employee Retention Credit?

The Families First Coronavirus Response Act (FFCRA) and Employee Retention Credit (ERC) are two separate programs that provide relief to employers affected by the COVID-19 pandemic. The FFCRA provides paid sick leave and expanded family and medical leave to employees affected by COVID-19. In contrast, the ERC provides a refundable tax credit to eligible employers who retain their employees during the pandemic.

How does the Employee Retention Credit work for COVID-19 relief efforts?

The ERC is a tax credit eligible employers can claim on federal payroll tax returns. The credit is equal to 70% of qualified wages paid to employees, up to a maximum of $10,000 per employee per quarter. Eligible employers can claim the credit for wages paid between March 13, 2020, and December 31, 2021.

What are the eligibility criteria for the Employee Retention Credit in 2021?

To be eligible for the ERC in 2021, an employer must have experienced a significant decline in gross receipts or been subject to a full or partial suspension of operations due to a government order related to COVID-19. The decline in gross receipts must be greater than 20% compared to the same quarter in 2019. Employers with 500 or fewer employees can claim the credit for all wages paid during the eligible period, while employers with more than 500 employees can only claim the credit for wages paid to employees who were not working.

What could disqualify an employer from claiming the Employee Retention Credit?

Employers who received a Paycheck Protection Program (PPP) loan cannot claim the ERC for the same wages paid with PPP loan proceeds. Additionally, employers who claim the ERC cannot claim the same wages for the Work Opportunity Tax Credit, the Indian Employment Credit, or the Empowerment Zone Employment Credit.

How can employers claim the $26,000 Employee Retention Credit?

Employers can claim the ERC by reporting it on their federal payroll tax returns. Eligible employers can claim the credit for each quarter meeting the eligibility criteria. The maximum credit an employer can claim is $26,000 per employee for wages paid between March 13, 2020, and December 31, 2021.

What is the deadline for claiming the Employee Retention Credit in 2023?

Employers must claim the ERC on their federal payroll tax returns for the year the wages were paid. For wages paid between March 13, 2020, and December 31, 2021, employers must claim the credit on their 2021 federal payroll tax returns. The deadline for filing federal payroll tax returns is generally April 30 of the year following the calendar year in which the wages were paid.

Leave a Reply

Your email address will not be published. Required fields are marked *