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Journal Entry for 2021 Employee retention credit

How do I record Journal Entry for 2021 employee retention credit

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QuickBooks Team

Journal Entry for 2021 Employee retention credit

I'll show you how to set up and track your Employee Retention Credit, dr1aira.


Before proceeding, you'll need to make sure you qualify for the credit. The size of your workforce, the structure of your business, and the reason why your business may or may not be closed affect whether you can take this credit.


Once you've determined you're eligible to accept the credit, let's set up your employees with the correct pay types. Here's how:


  1. Go to the Payroll menu and then select Employee.
  2. Select the employee you’d like to add paid leave.
  3. In the How much do I pay an employee section, select the edit icon to add pay types.
  4. Under the CARES Act sectionselect the pay types that apply to you: CARES Act Regular and CARES Act Overtime.
  5. If applicable, select and enter any Employer Paid Health Insurance Premium amount to be tracked on each check.
  6. Select Done.


Then, you can now run your payroll.

  1. Select Run Payroll.
  2. If you have multiple pay schedules select the schedule you are paying.
  3. Enter hours in the corresponding fields:
    • For regular hours in the Employee Retention Credit Regular.
    • For any overtime hours in the Employee Retention Credit Overtime.
    • If applicable, enter in the Employer Health Insurance Premium.
    • If your employee is salaried, select the salary amount shown to reduce the hours by the number of hours you are paying your employee with the Employee Retention pay items.
    • If your employee is commission only, you will need to convert their pay to an hourly rate.
  4. Enter any other items you need to include.
  5. Select Preview Payroll.
  6. Review the paychecks, and then select Submit Payroll.


After running payroll, the resulting tax credit will appear on your tax payments. Go to Taxes then select Payroll Tax to view your payments.



Additionally, I've added an article that'll help you pay your employees paid leave if they’ve been affected by COVID-19: Pay employees under the Family First Coronavirus Response Act and American Rescue Plan Act.


In case you'll need assistance in dealing with Employee Retention Credit, don't hesitate to get back on this thread. We're always here to help you.

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