TAX CREDITS
ERC
Employee Retention Tax Credit
The Employee Retention Credit (ERC) was authorized under the CARES Act and encourages businesses to keep employees on their payroll.
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The 2020 ERC Program is a refundable tax credit of 50% of up to $10,000 in wages paid per employee from 3/12/20-12/31/20 by an eligible employer. Up to $5,000 Per Employee.
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The 2021 ERC Program has increased to 70% of up to $10,000 in wages paid per employee per quarter for the first 3 quarters of 2021. Up to $21,000 Per Employee.
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WHAT ARE THE REQUIREMENTS FOR EMPLOYEE RETENTION CREDIT (ERC)?
A trade or business that was fully or partially suspended or had to reduce business hours due to a government order.
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The credit applies only for the portion of the quarter the business is suspended, not the entire quarter. Some businesses, based on IRS guidance, generally do not meet this factor test and would not qualify.
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Those considered essential, unless they have supply of critical material/goods disrupted in manner that affects their ability to continue to operate.
Businesses shuttered but able to continue their operations largely intact through telework.
However, any of these businesses still may qualify for the credit with the second factor test.
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WHAT IS NEEDED TO QUALIFY FOR THE EMPLOYEE RETENTION CREDIT (ERC)?
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Employees must be W2
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941 tax returns for 2019, 2020, 2021
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Every business was impacted via delays and shutdowns. Was your business negatively impacted in anyway during COVID-19, even if it was minor? Or did your business experience any decline in gross receipts for any quarter in 2020 or 2021 compared to 2019?
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