What is the Employee Retention Tax Credit (ERC)?
• The ERC is a refundable payroll tax credit that is available to employers who retained their W2 employees by keeping them on the payroll.
• Owners receive ERC benefits in the form of a check from the IRS for every qualifying quarter.
How much ERC can I claim?
• For 2020 you can claim up to 50 percent of qualified wages up to a maximum amount of $5,000 for the year for every eligible employee.
• For 2021, you can claim up to 70 percent of qualified wages up to a maximum amount of $7,000 for each of first 3 quarters in 2021 ($21,000 for the year) for every eligible employee.
How do I know if I’m eligible for the ERC?
• If you have 500 or fewer full time W-2 employees and incurred gross revenue declines in 2020 and/or 2021 relative to the same quarters in 2019, or were “Nominally Impacted” by governmental restrictions, your business may qualify.
o For 2020, any drop in gross income in any quarter of 50% or more relative to the same quarter in 2019.
o For 2021, any drop in gross income in any of the first 3 quarters of 20% or more relative to the same quarters in 2019.
o For both years, having been nominally impacted due to governmental restrictions resulting in any drop in gross income of 10% or more, or other significant changes in doing business (such as having to rent extra or temporary space).
How many W-2 employees can a company have and qualify for ERC?
• You can qualify for ERC if you have no more than 500 full-time employees.
o You can have more part-time W-2 employees and still qualify.
o When multiple companies are operated under a single control group, they are considered one company for employee-count qualification.
What are the qualifying periods for the ERC Program?
• The qualifying periods for ERC are all 4 quarters of 2020 and the first 3 quarters of 2021.
How long does it take to receive ERC?
• Typically, around 4-6 months from filing the required forms.
I got PPP, can I qualify for ERC?
• Yes, but any wages paid with PPP funds are not considered qualified wages for ERC (This is sometimes called “double-dipping” and it’s not allowed).
I already filed my 2020 taxes, but I didn’t claim the credit. Can I do so retroactively?
• Yes, if you already filed your taxes for 2020, you could retroactively claim the credit.
Are W-2 wages paid to owners, or to their families qualify for ERC? • No. Owners who control 50.1% of the business, their spouses and their family members are exempt from ERC credits.
What’s considered a full-time employee for ERC?
• For the purposes of the ERC, a full-time employee is defined as one that in any calendar month who worked at least 30 hours per week or 130 hours in a month.
What’s a qualified wage?
• Any wages for which you pay FICA or group health expense
My business didn’t start operating until after February 15, 2020. What is a Recovery Startup Business, and can I still claim credit?
• If your business started after February 15, 2020, and your gross receipts are under $1M, you may qualify for ERC as a Recovery Startup Business. You don’t have to demonstrate a loss in gross receipts in order to qualify for ERC.
• This is the only type of business eligible for ERC in Q4 of 2021.
I received other grants; can I still qualify for ERC?
• Don’t preclude yourself from finding out if you can still qualify. We take a conservative approach and will make sure we file for 100% of what you are eligible for, and will take into account any grants or awards that would go into your specific case.
Non-profits are eligible