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    Employee Retention Tax Credit (ERTC).

    The COVID-19 pandemic did not just shake the health sector. It left American businesses struggling to stay afloat and the global economy in crisis. Now, life is transitioning back to normal, and businesses have started opening their doors.

     

    To assist businesses with financial recovery, the government introduced the Employee Retention Tax Credit (ERTC) program. Its goal is to help businesses that retained employees get back on track and secure their financial future during the pandemic.

     

    Regardless of the benefits of ERTCs, the process can be very confusing, especially with the complexity of tax codes and qualifications.

     

     

     

     

     

     

     

     

     

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    The Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) was signed into law on March 27, 2020. It included two programs to assist businesses with keeping workers employed: the Payroll Protection Program (PPP) administered by the Small Business Administration and Employee Retention Tax Credit (ERTC) administered by the Internal Revenue Service.

     

    PPP funds are distributed based on 2.5 months of payroll and a minimum of 80% of the funds must be used on payroll to be eligible for forgiveness. Additionally, PPP funds are not taxable as revenue and you may still take deductions for the payroll covered by PPP.

     

    ERTC tax credits, however, are credits (or refunds) for a percentage of payroll in each quarter that you qualify. There are specific rules for determining eligibility by quarter, and limiting the dollars that can be claimed for each employee.

  • Funded by the CARES Act

     

    Originally created to encourage businesses to keep employees on the payroll as they navigate the unprecedented effects of Covid-19.

     

    The ERTC was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and provides a credit equal to 50 percent of qualified wages and health plan expenses paid after March 12, 2020 and before Jan. 1, 2021.

     

    A per-employee $10,000 maximum of qualified 2021 wages (Q1, Q2, Q3).

     

    That is a potential of up to $21,000 per employee!

    Up to $26,000 Per W-2 Employee

     

    Full time and Part Time Employees Qualify

     

    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. That is a potential of up to $5,000 per employee.

     

    In 2021 the ERC increased to 70% of up to $10,000 in wages paid per employee per quarter for Q1, Q2, and Q3.
    That is a potential of up to $21,000 per employee.

     

    Startups eligible for up to $33,000.

    No Restrictions No Repayments

     

    This is not a loan.

     

    While the ERTC was created in the CARES act along with the PPP Loans - this is not a loan, there is no repayment.

     

    There are no restrictions for what recipients of the credit must use the funds.

  • Get Employee Retention Credit For:

    Revenue Decline

    Group Gathering Limitations

    Capacity Restrictions

    Full & Partial Shutdowns

    Supply Chain Disturbances

    Customer or Jobsite Shutdowns

    Travel Restrictions

    Remote Work Orders

    Commercial Disruption

    Customer Or Vendor Restrictions

  • Don’t Let Misconceptions Hold You Back From Claiming Your ERTC Credit.

     
     
    The ERTC tax incentive is heavily underutilized due to misconceptions surrounding eligibility. Take a look at some of the most common ERTC misconceptions.
     
     

  • ERTC Misconceptions

    We Had No Revenue Decline

    Revenue is one of many factors that determine whether you qualify for ERTC. In fact, companies without a considerable revenue decline can still qualify for the employee retention tax credit.

    Our Business Is Not Essential

    Your business does not have to be deemed essential to qualify for employee retention tax credit.

    We Have Received A Paycheck Protection Program Loan Before

    Companies that have received one or both PPP fundings are eligible for the employee retention tax credit.

    We Never Shut Down Our Business

    The ERTC tax incentive has several provisions that make it possible for employers who were not forced to completely shut down their business to qualify for the ERTC. Businesses that were forced to partially shut down their business can make a claim. Additionally, those businesses without a government mandate to shut down or partially shut down their business can still qualify through revenue decline.

    Our Revenue Went Up After A Shift In The Market

    Although your revenue increased for the year, many companies experienced declines in one or more quarters in 2020 and/or 2021 when compared to 2019. These short-term revenue declines allow you to qualify even with increased annual revenues.

    It’s Too Late To Apply For The ERTC

    If eligible, employers can claim the ERTC for qualified wages paid in 2020, as well as Q1, Q2, and Q3 of 2021. The statute of limitations for the 2020 ERTC does not close until April 15, 2024. The statute of limitations for the 2021 ERTCs does not close until April 15, 2025.

  • Here are the steps in calculating the ERTC:

     

    1

    Determine what quarters of 2020 - 2021 your business qualifies.

    2

    Determine total qualified wages, including health plan expenses.

    3

    Calculate qualified wages paid to each employee in 2020.

    4

    Calculate qualifies wages  paid to each employee in Q1, Q2 and Q3 of 2021.

  • Got Questions?

    Please take a look at the answers to our frequently asked questions on ERTCs at a glance.

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