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Home Credit The employee-retention tax credit is a windfall. But it could put small...

The employee-retention tax credit is a windfall. But it could put small businesses in a bind.

Small businesses taking the employee retention tax credit might get hit with a tax bill before seeing the benefits of the credit — and the IRS should step in to fix that, according to a prominent law firm.

The credit allowed eligible businesses that were required to close or partially suspend operations during Covid-19, or saw business fall by 50% or more, to deduct up to 50% of qualifying wages of employees, up to $5,000 per employee in 2020. Congress in December passed legislation boosting that credit to 70% of qualifying wages up to $14,000 per employee through June 30, 2021.

It also at that time struck down a prohibition on businesses that received a Paycheck Protection Program loan from claiming the credit, opening up the tax credit to more than 5.2 million previously ineligible businesses.

Read the full story on cleveland.com’s sister site, Cleveland Business Journal.

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