Your Business & the Employee Retention Tax Credit
You may now be eligible for Employee Retention Credits (ERC) of up to $26,000 peremployee.
The ERC program was created under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) as part of the federal government’s relief program to encourage and reward business owners that retain employees during the COVID-19 pandemic. Recently the policy was amended to enable business owners to qualify for ERC tax credits even if they received PPP loans. The time period the program covers was also extended from March 22, 2020 to December 31, 2021.
Does My Business Qualify?
The eligibility requirements for ERC are as follows:
Your business experienced a partial or complete suspension of operations. This includes:
Your business experienced a significant reduction in revenue during any quarter of 2020 or 2021 as compared to 2019
2020 ERC Tax Credits Eligibility
For 2020, if your business was fully or partially suspended, was forced to restrict business hours or experienced a reduction of 50% or more revenue as compared to the same quarter in 2019, you are eligible for ERC tax credit. Gross receipts must equal less than 50% as compared to the same quarter in 2019.</p><p>If your business meets this requirement, you are qualified for the ERC tax credit equal to 50% of eligible employee wages.
2021 ERC Tax Credits Eligibility
In 2021, the rules are the same as 2020, except for a reduction of at least 20% in quarterly gross receipts instead of 50%. If you have a reduction of 20% or more revenue than the same quarter in 2019, you are eligible for ERC tax credit. The ERC tax credit is equal to 70% of eligible employee wages.