The Employee Retention Credit (ERC) is a refundable payroll tax credit that is worth up to $5,000 per employee for 2020 and up to $21,000 per employee for 2021. Available through the CARES Act to businesses impacted by COVID-19, the credit has made it possible for many businesses around the country to keep the lights on. To this day, many employers are not aware of the credit or have prematurely assumed that they do not qualify for the credit. While the credit is complex in nature and there are a lot of moving parts, it is more than worth the effort to claim it.
Some of the most common misconceptions about qualifying for the credit include but are not limited to:
- we took the PPP, so we are not eligible
- our CPA/accountant told us that we do not qualify
- we were told we needed a decline in gross receipts and our capacity must have been reduced
- we are an essential business, so we are not eligible
- we did not shut down our office, so we are not eligible
- our operations were suspended, but we were profitable, so we are not eligible
The above line items are just the tip of the iceberg. Get in touch with a specialist by clicking here.
How about ways to qualify for the ERC? Employers, including organizations that are tax-exempt, are eligible for the credit if they were in operation during the calendar year 2020 and experienced either:
- partial/full shutdown due to government mandates and restrictions
- supply chain interruptions and delays
- inability to work with vendors either domestically or internationally
- capacity limitations due to social distancing (i.e., restaurants operating at 50%)
- a drop in product or service output due to the pandemic (i.e., manufacturers' throughput diminished)
- reduced hours of operation due to government mandate
- required sanitation/cleaning protocol due to government mandate
If your business was subjected to any of the above line items, chances are, your business is eligible for the ERC. Do not leave tens of thousands of dollars or in many cases, hundreds of thousands of dollars on the table. This money is rightfully owed to you for payroll taxes that you have already paid; plus any surplus provided by the computations prepared for your enterprise.
ERT Credit has calculated the ERC credit for hundreds of employers across the country and continues to actively process both computations and amended returns for employers. Click here to reach out to us for more information.