Get $26,000 per Employee with Federal ERC Credits
Like the PPP/EIDL, there is no repayment as it is a tax credit of up to 26,000 per W-2 worker you employed in 2019/2020.
It is no secret that the Coronavirus has had an extremely negative impact on many businesses across the US. That is why several payroll tax credits were provided to help employers. One of the options still available is the Employee Retention Credit (ERC).
The ERC is an ability to help businesses following the Coronavirus Aid, Relief, and Economic Security Act. With this option, eligible employers who have been able to keep employees on the payroll can claim a fully refundable tax credit.
For 2020 the maximum ERC is $5,000 per employee.
For 2021 the maximum ERC is $7,000 per employee, per quarter, for the first three quarters of the year, with a total maximum ERC of $21,000 per employee.
Eligibility for Participation Includes:
If one of these two things happened in 2020 or 2021, business and nonprofit organizations are eligible in any quarter:
- Activities have been suspended in whole or part due to a Covid-19-related governmental order for any part of the year.
- You have faced a significant decrease in gross receipts for one or more quarters. The business's gross receipts must decrease by 50% compared with the same quarter in 2020. Compared to the same quarter in 2019, the gross receipts had to descend by 20% or more in 2021.
- For 2020, employers with 100 or fewer full-time equivalent (FTE) employees during 2019 can claim the ERC on all wages paid to employees during the period in which the employer satisfied the shutdown test or the gross receipts test.
- The small employer threshold from 2021 is 500 full-time equivalent employees instead of 100. That means employers with up to 500 full-time equivalent employees in 2019 can сlaim the ERC for 2021 on wages paid for working or non-working periods.
- Until March 2021, when IRS regulations updates made the ERC more accessible, it was not widely used. The businesses that picked between the Paycheck Protection Program and ERC should not do it anymore.
ERC has no application. You can claim it by amending prior Federal Form 941 payroll tax returns. If you have doubts about determining whether you qualify, or if you think you are and need to be assisted in it you can always ask for professional help.