Introduction to ERC Tax Credit
The Employee Retention Credit (ERTC) provides a tax credit of up to $5,000 for a full-time employee or $2,500 for a part-time employee to employers who keep them on their payroll while dealing with the economic consequences of Covid-19. This credit is available for any taxable year beginning after December 31, 2019 and before January 1, 2021. It can help businesses of any size get back on their feet and remain competitive.
The Employee Retention Credit (ERTC) can be used to offset payroll taxes such as Social Security, Medicare, and other federal taxes. It can also be used to offset other payroll and benefit costs, such as contributions to 401(k) plans and life insurance premium payments.
In order to be eligible for the Employee Retention Credit (ERTC), employers must have their operations partially or fully suspended due to a governmental order. They must have seen a substantial drop in gross receipts (at least 50 percent) compared to the same quarter in the previous year. Finally, employers must have retained the same number of employees or increased their number of employees in order to qualify for the credit.
Employees who are furloughed or laid off can still be counted towards the number of employees that employers need to retain in order to qualify for the credit. Employers will need to compare their gross receipts between the same quarter in the previous year and the current year to determine whether they qualify for the credit.
The Employee Retention Credit (ERTC) can be a great help for businesses who are struggling due to the economic effects of the coronavirus pandemic. This credit can help businesses of any size stay afloat and retain their valuable employees. Employers should be aware of the criteria for eligibility for the credit and apply as soon as possible to ensure they can take advantage of this valuable tax credit.
What is the ERC Tax Credit?
It is a federal tax credit created by the CARES Act in 2020 to help businesses affected by COVID-19 keep their workforce employed during the crisis.
The ERC Tax Credit allows eligible employers to receive a refundable tax credit for up to 70% of the first $10,000 in wages paid to each employee during a specified period. The credit is equal to 50% of the qualified wages paid to an employee, up to a maximum of $5,000. To be eligible for the credit, employers must have been in existence on March 12, 2020, have experienced a reduction in gross receipts during a specified period compared to the year before, and must have fewer employees in 2020 than in 2019.
The credit can be used to offset payroll tax liabilities, and can even be used to receive a refund from the IRS if the payroll tax liabilities are less than the amount of the credit. This can provide cash flow to employers who may be struggling to make ends meet during the pandemic.
The ERC Tax Credit has helped to keep thousands of businesses afloat, and has been a lifesaver for many employers. With the help of the ERC, employers can keep their workforce employed, avoiding layoffs and paying salaries during times of economic hardship. This can be an invaluable resource to businesses, enabling them to continue operations while they wait for the economy to rebound.
The ERC Tax Credit is a powerful tool in the fight against the economic downturn caused by the COVID-19 crisis. It provides an incentive for employers to keep their staff on payroll, and can provide much needed cash flow to struggling businesses. Understanding the specifics of the credit can help business owners stay afloat during these difficult times.
Benefits of the ERC Tax Credit
The ERC Tax Credit is a valuable tool for businesses to utilize in order to help them financially recover from the impact of the coronavirus pandemic. The tax credit offers businesses a way to reclaim up to 70% of their employee wages for up to $7000 per employee annually. For many businesses hit hard by the pandemic, time is of the essence and the ERC is a great way to get immediate relief.
One of the main benefits of the ERC is its reliability. The tax credit is a simple and straightforward way to reclaim wages which is a very important incentive for businesses that need the financial assistance. Not only does it offer businesses guaranteed money back, but alsorequires minimal paperwork in order to apply for it, making the process easy and efficient.
The ERC is not only easily accessible but also retroactive. That means that businesses can apply for the tax credit even if certain actions had been taken prior to its opening, such as letting go of an employee or reducing their hours. This allows businesses to get the financial assistance that they need even if they had to make difficult decisions due to the impact of the pandemic.
In addition to this, the ERC offers businesses more freedom and flexibility. For example, businesses can determine how much they can save based on their reduced payrolls during the pandemic, ensuring that they get the exact amount that they need and no more. This will help businesses save money and stay afloat during these difficult times.
The ERC Tax Credit is an invaluable resource for businesses hit hard by the pandemic. It is simple, reliable, and allows businesses to reclaim up to 70% of their employee wages. With the ERC, businesses can take advantage of a straightforward way to get the financial assistance they need without having to worry about getting bogged down in paperwork. With the ERC, businesses can receive the help they need to stay afloat during these difficult times.
How does the ERC Tax Credit Work?
The ERC Tax Credit is a valuable incentive available to employers who have been adversely affected by the economic downturn caused by the COVID-19 pandemic. Eligible employers may be able to receive a credit against applicable employment taxes in each qualifying period of up to 70% of qualified wages paid (up to $10,000 per employee).
The purpose of the ERC Tax Credit is to help businesses cover the cost of retaining employees and to cushion the economic impact of the pandemic. The credit is available to businesses who have experienced a decline in their gross receipts of more than 20% compared to a prior period. Businesses must have been in operation before 2020 and be subject to taxes withheld from employees’ wages.
It is calculated based on all eligible wages paid during the employer’s tax year and can be claimed for wages paid to each individual employee, regardless of how many hours they worked. The ERC Tax Credit is fully refundable, which means that if the amount of the credit is greater than the company’s total employment tax liability, the employer can receive the difference in the form of an IRS refund.
The ERC Tax Credit provides eligible employers with essential financial assistance to help them retain their most valuable asset – their workforce. Employers should take quick action to determine their eligibility to ensure that they don’t miss out on this valuable incentive. Should you be eligible? Investigate the ERC Tax Credit for yourself and find out!
Qualifying for the ERC Tax Credit
Securing the Employee Retention Credit can help businesses keep more income and retain workers. This federal relief program has been available since the CARES act in March of 2020. The tax credit could total up to $5,000 per employee that qualifies and can be used to offset up to 50% of a business’ payroll.
In order to qualify for the Employee Retention Credit, your business must have been impacted by government orders such as reduced or interrupted operations due to the pandemic. It is important to note that businesses that received funds from the PPP loans are not eligible for the Employee Retention Credit.
Business owners have until December 31st, 2021 to apply for the credit. To do this, employers must meet the criteria provided by the IRS and then fill out Form 941-X. It’s important for eligible employers to act soon to maximize the benefits.
Business owners seeking additional information should consult a qualified professional that is well-versed in the Employee Retention Credit. Additionally, an ERC consultant can provide guidance to companies that may be eligible and provide assistance in applying for the tax credit. Such experts can save businesses time and money on IRS paperwork and proper filing.
You may be feeling overwhelmed by all the considerations of your business, but the Employee Retention Tax Credit is one way to help. With the right help, you can make informed decisions to maximize your business from the comfort of your home. Benefits from this federal relief program are within reach; act now to maximize the potential of the ERC Tax Credit.
What entities qualify for the ERC Tax Credit?
The ERC Tax Credit can be beneficial to certain types of entities in order to help employers maintain the continuity of operations and offset the costs of wages and health benefits. Qualifying entities include employers that operate for profit, have experienced an economic hardship related to the COVID-19 crisis, and have less than 500 full-time employees.
Non-profits, tribal employers, housing cooperatives, and selected governmental entities may also qualify. Additionally, employers who are taking advantage of the Paycheck Protection Program are also eligible. Certain businesses, such as those involved in the hospitality, restaurant, and related industries, will qualify even if the organization has more than 500 full-time employees at the time they experienced a COVID-19 related decrease in gross receipts.
The ERC Tax Credit is a valuable tax credit, enabling employers to receive a credit of up to $5,000 per employee, per year, against applicable payroll taxes for certain employee qualifies wages and qualified health plan expenses paid after March 12, 2020, and before January 1, 2021. To qualify for the credit, employers must offer employee wages and benefit coverage consistent with the rules established by the IRS.
The ERC Tax Credit is a great way to reduce payroll and health benefit costs associated with the COVID-19 crisis. Employers should review their organizational needs in order to see if they meet the qualifications to benefit from this important tax credit. By understanding the requirements and taking advantage of the ERC Tax Credit, employers can ensure that their current operations are in compliance with all applicable laws and regulations.
What criteria must be met to qualify for the ERC Tax Credit?
The Employee Retention Credit (ERTC) is a tax incentive available to employers, self-employed individuals, and certain non-profits that have experienced significant financial hardship due to the coronavirus pandemic or subsequent economic shutdowns. In order to qualify for the ERC Tax Credit, certain criteria must be met.
To start, the individual or business must have suffered from a full or partial economic downturn due to the Coronavirus pandemic. This includes but is not limited to decreased revenues due to cancelled contracts, closures of physical premises, and restrictions on operations. In addition, any disruptions due to the extended time for payroll processing if a tax return was delayed or due, must also be factored in.
The second criterion requires that the individual remain either a full or part-time employee of the qualified organization for the duration of the eligible period. Additionally, the period for which a single employee is eligible for an ERC Tax Credit cannot exceed one year from the start of the applicable period.
Thirdly, the ERC Tax Credit requires that the employer not claim the Credits related to the wage payments under any other provisions of the Internal Revenue Code. To further qualify, the employee’s wages must not exceed $10,000 on a quarterly basis. Thus, should an individual’s wages exceed this amount, the employer can only claim the Credit on wages up to (but no more than) the specified amount.
By adhering to the above guidelines, employers should be eligible to take advantage of the ERC Tax Credit and benefit from substantially reduced liabilities. This tax-saving opportunity is available through 2021 and beyond, so it behooves employers to understand and comply with the terms and conditions of the ERC Tax Credit in order to maximize tax-saving potentials.
How do I determine my FTEs to qualify?
Figuring out how many full-time equivalents (FTEs) you need to qualify for the Employee Retention Credit (ERTC) can be a tedious process. Fortunately, it doesn’t need to be. With the proper guidance and tools, you can quickly identify if and how many FTEs you need to make sure your business is eligible for the ERTC.
First, you’ll need to understand the definition of an FTE, as outlined by the IRS. Essentially, an FTE is an employee who works 30 or more hours per week equivalent to one full-time employee. Depending on your business’s size, you may need to have a certain number of FTEs to qualify for the ERTC.
To further determine your FTE requirement, you’ll also need to factor in the number of hours worked by part-time employees or those who average less than 30 hours per week. You’ll then divide the total hours worked by all employees (full-time and part-time) by a standard of 40 hours to figure out the number of FTEs, ensuring you meet the minimum number of hours worked outlined by the IRS.
To keep the process organized and efficient, it’s important to use the right set of tools and solutions. Having a central platform where employee data can be stored, analyzed, and reported on can make it easier to track total hours worked and ensure your FTEs meet the ERTC qualification criteria.
Figuring out the number of FTEs you need to be eligible for the ERTC doesn’t have to be complicated. With the right set of tools and data available, it can be a straightforward process that could potentially mean taking advantage of the employee retention credits available.
Filing and Documentation Requirements for the ERC Tax Credit
Navigating the ERC Tax Credit filing and documentation requirements can seem daunting at first; however, the process is actually quite straightforward. Companies who have faced closure or significant revenue decline are eligible for the ERTC, which can provide a credit worth up to five thousand dollars per employee and eligible independent contractors for each quarter after the 2020 taxable year.
It’s important to note that businesses are only eligible for the ERTC if they, 1) have had to close at least part of operations due to COVID-19, 2) are longterm operators that have experienced a reduction in revenue, 3) are keeping workers on payroll, and 4) can substantiate their qualification.
The documentation requirements are simple and straightforward; companies must submit payroll documents from each of the relevant employer quarters, including tax forms W-2 and 1099s, as well as copies of Form(s) 941 for the applicable period and the corresponding wage and benefit expenses. Depending on the size of the business and the type of documentation available, additional materials may be necessary.
The most important thing to remember when filing the ERC is that timing is everything. Companies must submit requests before meaningfully reducing their workforce to be eligible for the ERTC. Keep in mind that the window period for submitting filings is typically only four to six weeks between February 1st and May 31st, so it’s important to act quickly to ensure eligibility.
Ultimately, with the right documents and timely filing, companies can qualify for the ERTC tax credit. It’s a great opportunity for businesses affected by the pandemic to recover some of the costs associated with keeping their workers and operations afloat. Successful filing of the ERC can provide a much-needed financial cushion.
What documentation is needed to apply for the ERC Tax Credit?
The Employee Retention Tax Credit (ERTC) can be a great way to help businesses during the pandemic. But determining if your company is eligible and what documentation is needed to apply can be daunting.
The ERTC is a payroll tax credit for employers equal to 50% of qualified wages paid to an employee after March 12, 2020 and before January 1, 2021. If you have experienced a reduction in gross receipts for the year compared to the same period in the previous year then you may be eligible.
In order to apply for the ERTC, you will need to provide several important documents. These include detailed records of qualified wages (wages and benefits paid and the corresponding time period in which the wages were made), Form 941 for each quarter, copies of agreements with employees, and other wage statements.
It is also important to make sure that all documents are accurate and up to date to ensure that your company is eligible. In addition, the IRS requires a detailed calculation of the ERTC. The calculation includes eligible wages paid to employees for each quarter, the amount of qualified wages paid for each quarter, and the total amount of the credit.
Finally, employers must still file an IRS Form 941-X (or an amended Form 941) to claim the ERTC after the end of the year. It is important to keep records of the ERTC calculation and eligible wages in order to file the Form 941-X.
The ERTC can be a great benefit for employers during the pandemic, but proper documentation and filing is necessary to ensure that your company can take advantage of this tax credit.
How do I file for the ERC Tax Credit?
The Employee Retention Credit (ERTC) is a refundable tax credit available to eligible employers who employ or retain employees during the 2020 and 2021 calendar years. Employers who are eligible for this tax credit may be eligible for a refundable tax credit of up to $5,000 per employee for wages paid between January 1, 2020, and June 30, 2021, depending on the amount of wages paid and the number of employees employed.
Filing for the ERTC credit is part of the employer’s responsibilities when it comes to claiming the credit. The IRS provides information to employers on how to file for the ERTC credit, including calculating and claiming the credit, as well as filing for refundable tax credits. It is important to note that employers should file for the ERTC credit as soon as possible, as potential refunds may not be available after June 30, 2021.
When filing for the ERTC credit, employers should be aware of the IRS Form 941-X. This form is used to calculate and claim the ERTC credit, including any refundable tax credits already claimed by the employer. Employers must fill out the form correctly to ensure the proper calculation and amount of the ERTC credit. Furthermore, employers should ensure that all forms related to the ERTC credit are filled out correctly, as incorrect forms may result in delays or denied claims.
In addition to filing the ERTC credit, employers must also consider other factors when filing for the ERTC credit. These factors include having an appropriate payroll system to track wages paid to employees, properly tracking and documenting the wages paid to employees, and providing the required documents and information to the IRS. By following the proper steps and filing the ERTC credit correctly, employers can take advantage of this unique tax credit and potentially receive a refundable tax credit of up to $5,000 per employee for wages paid between January 1, 2020, and June 30, 2021.
What forms and documents do I need to provide?
Whether you’re a business owner or an employee, the Employee Retention Credit (ERTC) can give you a much-needed break. With the ERTC, employers can claim up to 50% of employee wages (with a cap of $10,000) during the coronavirus pandemic. If you’re considering taking advantage of this great benefit, understand that it won’t happen overnight. It’s important to make sure you have the right forms and documents in order to make sure your ERTC application is successful.
Let’s start with the basics. First, you’ll need to fill out Form 941-X. This is the form employers need to “amend” or correct the employer’s quarterly tax return that was filed for the covered period for which they’re claiming the Employee Retention Credit. Other important documents include evidence of the closure of your business due to COVID-19 or the significant decline in gross receipts, as well as proof of employee wages paid, and documentation supporting the eligibility of your business for the ERTC.
Be sure to keep records and documents of your employees’ wages for those who’ve been laid off, furloughed, or had their hours cut due to the pandemic. This is important in order to make sure you receive the full credit that you’re eligible for. Once you’ve gathered all of the necessary documents and forms, you’ll be ready to submit your application for the Employee Retention Credit.
If you’re ready to take advantage of this great tax benefit, you’ll need to make sure you have the right forms and documents ready for the ERTC application. With the proper amount of preparation, you’ll be able to get your desired credit quickly and easily. So don’t miss out on this fantastic opportunity!
Determining the Amount of the Credit
Figuring out the amount of the Employee Retention Tax Credit (ERTC) can be tricky. Companies have to factor in things like wages paid, limitation based on certain taxes, and who qualifies for the credit. Despite all the variables, it’s a critical look to take in order to get the best return on your investment.
To start, you need to calculate the wages paid during each portion of the current year or quarter — the period when the credit is allowed. The wages must only be for those employees who meet the qualified wages limit. It’s important to note that those who don’t meet the criteria are not eligible.
In addition, you’ll need to narrow down your desired credit to either 50% or 70%. This depends on whether or not you are subject to certain taxes, such as the Social Security and Medicare taxes, and other applicable taxes. It’s a good idea to get well versed on the subject matter as those numbers can change from time to time.
The final step in determining the amount of the ERTC you’ll receive is calculating the difference between wages paid for eligible employees, the tax rate, and the 50%/70% limitation. With this info, you can now determine how much of a credit your company is eligible for.
With a few steps and the right calculation, you can determine the amount of Employee Retention Tax Credit you’ll receive. Just make sure you have all the info you need up front, to make sure you get the most out of the credit.
Is there a limit to the amount of the ERC Tax Credit?
Understanding the ERC Tax Credit can be very beneficial for employers and employees. This article covers the limitations, or restrictions, of the tax credit to help you maximize its potential and get the most out of it.
The tax credit is available only to employers that have been affected by the COVID-19 pandemic. To be eligible, employers must have suffered a significant decline in gross receipts. For employers, the maximum amount of the credit is $5,000 per qualifying employee.
The credit is available for wages paid after March 13, 2020, and before January 1, 2021, and it also applies to certain qualified benefits paid to the employee. Moreover, the tax credit is limited to the amount of Social Security payroll taxes the employer pays on a quarterly basis, and it is not refundable or transferable to another employer.
Employers should also keep in mind that the employee receiving the credit must not have been eligible for the credits during the period covered by the CARES Act, which was March 13, 2020 to December 31, 2020. Furthermore, employers who receive Paycheck Protection Program loans are not eligible for the tax credit.
Aside from the restrictions provided by the IRS, employers should be aware that if they take the tax credit, they must not simultaneously claim a deduction for the wages used to calculate the tax credit.
One last point to consider is that some states may have additional rules applicable to the ERC Tax Credit. To ensure compliance, employers should consult with their local or state government to make sure they do not miss any potential tax savings.
In conclusion, understanding these restrictions can help employers get the most out of their tax credit. Consulting with an expert on the ERC Tax Credit is also advised to get further assistance and information on the topic.
How do I calculate the amount of the ERC Tax Credit I can claim?
Calculating the amount of the Employee Retention Credit (ERTC) you can claim can be complex. Many businesses are eligible to claim the credit against their payroll taxes, and understanding all the rules and taxation can be daunting. Luckily, there are numerous resources to help you determine the credit amount your business is eligible for.
The first step to calculate the amount of the Employee Retention Credit is to determine your eligible wages. All wages paid to employees during the COVID-19 crisis are eligible for the ERC Tax Credit, up to an annual salary of $10,000 per employee. This includes salaries, bonuses, wages, and even vacation pay and sick pay. Once you have determined the wages, the next step is to add up the qualified health plan expenses for each employee. This includes premiums, including dental and vision insurance, as well as employer contribution amounts to Health Flexible Spending Accounts (FSAs).
The final step in calculating your ERTC is to subtract the employee’s wages and the amount of qualified health plan expenses from the total eligible wages. This figure will be the total amount of the Employee Retention Credit you can claim. While the process of calculating the Employee Retention Credit can be complex, understanding the process will help you get the most from your credit.
Possible Pitfalls of the Credit
If you’re a business owner, you know how difficult it can be to manage the financial obligations that come with running a successful operation. To make matters worse, trying to keep your employees on the payroll has become increasingly difficult in recent times. With the Employee Retention Credit (ERTC), the IRS has put forth a powerful tool to help businesses cover the costs of keeping their employees employed. But with any relief program, there are drawbacks and potential pitfalls a business must consider before taking full advantage.
The most common ERTC pitfall is not employing the employees for whom the credit is recommended. To be eligible for the Employer Retention Credit, the employee must remain employed in nine out of twelve months at the highest compensated rate. This means you must maintain the employees on your payroll for a full year to receive the tax credit. A second pitfall is missing out on potential credits due to not knowing the full scope of the credit’s eligibility requirements.
The ERTC also has complications due to existing tax provisions and government relief programs. This means businesses must be aware of the benefits they are already eligible for before applying for tax credits. Finally, the ERTC has restrictions about the size of the company eligible for the credit, with it capping at entities with 500 employees. If your business is larger than 500 employees, you should be aware of the limitations that come with the ERTC tax credit.
Businesses must be aware of the potential pitfalls associated with the Employee Retention Credit (ERTC) before taking advantage of the program. By understanding the risks associated with the credit, businesses can use the ERTC as a helpful tool to assist in this precarious financial environment. Knowing the full scope of the credits and complying with the restrictions can save businesses from paying unneeded taxes and ensure their success well into the future.
What are some common mistakes people make when filing for the ERC Tax Credit?
We help business owners understand and take advantage of tax-reducing opportunities that are available to them.
The Employee Retention Credit (ERTC) is a major tax benefit for small businesses, and getting it right can help small business owners save money and time. Unfortunately, many business owners make mistakes when filing their ERC tax credit that can cost them money and time. It’s important to understand the process of filing for the ERC Tax Credit as many mistakes can be avoided if paid attention to.
One very common oversight that business owners make when filing for the ERC Tax Credit is failing to include all qualifying employees. To be eligible for the credit, businesses need to have all necessary wage and other documentation for all employees included. Not doing so can be a costly mistake, resulting in denial of the ERC Tax Credit or the need to refile, resulting in lost time and money.
Another mistake of ERC Tax Credit-seekers is overlooking government labor regulations. Before filling out the application, businesses should check all relevant legal requirements to ensure any wage calculations made are in accordance. Any discrepancies can lead to delays in the process or an outright denial from the government.
Business owners should also pay attention to the deadline for the ERC Tax Credit. It’s important to adhere to the timeline, as missing the window for submission can potentially disqualify a business from claiming their deserved tax credit.
When filing for the ERC Tax Credit, accuracy and vigilance is key to ensure the best possible outcome. Taking the time and energy upfront to get the filing process right can save business owners tons of energy, time, and – most importantly – impact their bottom line.
How do I avoid penalties and audits for claiming the ERC Tax Credit?
The Employee Retention Credit (ERTC) is an incentive for businesses to retain their employees and reduce the financial hardship that the pandemic has caused. It can be a very helpful tool for businesses affected by the Covid-19 pandemic, but it is important to understand all of the rules and regulations involved so that you don’t end up facing penalties and audits.
The most important thing you can do to avoid penalties and audits for claiming the Employee Retention Credit is to be sure that you are following the rules and guidelines set forth by the IRS. Make sure to read all of the developments and consult with a tax professional to ensure you are staying in compliance and aware of any changes.
A great way to reduce the risk of facing an audit is to document everything. Detailed records of wages and credits are necessary and should be kept in case something goes wrong. A complete and accurate record of the wages paid to employees is very important and must be submitted to the IRS. It is also important to accurately report all your company’s income and expenses.
You can also reduce penalties and audits by thoroughly verifying that each employee qualifies for the Employee Retention Credit. The specific requirements for eligibility must be met to ensure your claim is valid.
By following these three simple steps you can avoid facing penalties and audits when filing for the Employee Retention Credit. As long as you have documented your wages and expenses and made sure each employee meets the qualifications, you should have no problem getting the credit that your business needs. Be smart and reach out to a tax professional if you are unsure of anything.
Writing about the “Conclusion” of something can be a bit tricky. After all, by definition a “Conclusion” is the end point or outcome of a situation. But the difficulty with that is that until the current situation is over, there is no way to actually provide a true conclusion.
So when it comes to the Employee Retention Credit, we can offer advice and information, but until the tax credit situations change, there is no definitive answer or conclusion.
Rather than give an incorrect or incomplete conclusion, we can give helpful advice and information. We can help you better understand the tax regulations, including the Employee Retention Credit. We can provide advice on how to get help and where to find answers to questions about the ERTC.
In conclusion, we urge you to seek help in understanding the Employee Retention Credit, and when the current situation changes, to seek advice on how to best make use of the ERTC. Our team of professionals can help guide you through the current regulations and provide help and advice when the rules change.
Key Takeaways from ERC Tax Credit Overview
The Employee Retention Tax Credit (ERTC) can help employers keep their workers, even during tough economic times. The ERTC is a refundable tax credit for up to $5000 per quarter for companies facing financial hardship due to the COVID-19 pandemic. It is intended to promote employee retention by incentivizing employers to keep their existing employees on their payroll. The ERTC can be used to offset a Core payroll taxes related to employees subject to the credit.
The ERTC is available exclusively to employers who have experienced a full or partial closure due to governmental orders, as well as those whose gross receipts have decreased by more than 20 percent compared to the same quarter in the previous year. It is also available to certain employers who are nonprofit organizations, tribal businesses, and certain housing credit recipients.
One of the key takeaway from the ERTC is that employers may receive a credit equal to 50 percent of qualified expenditures relating to wages paid for up to $10,000 of wages (including costs related to health benefits) for each qualified employee, per calendar quarter. The maximum credit available for the year is $5,000 per employee, or $7,000 for an employee who works an average of more than 30 hours per week. It is important to note that employers may not be eligible for the ERTC if they are participating in the Paycheck Protection Program.
The ERTC is designed to help employers keep their staff employed during this difficult time. Employers can claim the credit for up to four quarters, with the credit covering as much as $10,000 per quarter for all qualified employees. For those employers experiencing financial hardship due to the COVID-19 pandemic, understanding the eligibility for the ERTC and the fact that it can be used to offset the core payroll taxes related to their employees that are subject to the credit, can be a great way to remain financially sound and keep their workforce whole.