Employee Retention Credit What It Is and How to Get It

December 2, 2022

Employee retention can be difficult to maintain, especially in the age of smartphones and social media, where people are constantly looking for ways to better their careers by switching companies.

Basically, Employee Retention Credit allows businesses that hire eligible individuals to receive credit on their taxes—that means money back in your pocket.

You’ll want to use the employee retention credit when you have increased training and development costs or increased wages and benefits associated with existing employees.

Although, the amount of this credit varies depending on the number of qualified full-time employees in your business.

Unfortunately, many business owners don’t know about the ERC and don’t take advantage of it, so let’s learn more about how to qualify and apply for your tax credit.

What is the employee retention credit?

The Employee Retention Tax Credit is a measure that provides tax relief for businesses that retain qualified employees.

The credit is available to employers providing health insurance coverage for at least six months out of the year to their eligible employees.

How do I qualify for the employee retention credit?

To qualify for the employee retention credit, you must meet the following criteria:

  • You need to have at least 50 full-time employees.
  • You must have at least one full-time employee that worked for you for a minimum of two years.
  • Employees who meet these requirements must work for your company for a minimum of two consecutive years.

Suppose you do not meet the above criteria. However, if your business does qualify, the maximum credit you can receive is 50% of up to $10,000 per year. This tax credit is refundable, so it would be available even if no taxes are due on your behalf.

How do I claim the employee retention credit?

To claim the employee retention credit, you must satisfy the following criteria.

  • You have taxable wages for the tax year.
  • The qualified employment positions are filled by individuals who were not previously employed by you or your related entities during the one year ending on the date that they were hired;
  • The employee has been in a qualified position with you for at least three years.

To claim ERC, during the applicable quarter(s) in which the qualified wages were paid, employers must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.


Retaining your employees is crucial to the success of your business. The best way to do this is by ensuring they feel valued at work, are satisfied with their position, and have growth opportunities.

One way to create a culture where this is possible is by implementing an employee retention credit program. There are many ways to go about doing this. Still, one popular option is providing employees with monetary incentives for staying with the company for a set period.

With these programs in place, you can be sure that you’re retaining your best workers while motivating those who may be on the fence about staying or leaving.