Employee Retention Tax Credit (ERTC)

The Employee Retention Tax Credit can be worth up to $26,000 per Employee!

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What is the Employee Retention Tax Credit?

Employee Retention Tax Credit (ERTC) is a tax credit provided by the federal government to encourage employers to maintain their workforce during the COVID-19 pandemic. The ERTC is a refundable payroll tax credit available to eligible employers who have experienced a significant decline in gross receipts or have had to suspend their operations due to government orders related to COVID-19. The credit is designed to help employers offset the cost of retaining employees on their payroll and covers up to 70% of eligible wages paid to employees.

To be eligible for the credit, employers must meet certain criteria. First, they must have been in operation prior to February 15, 2020, and have experienced either a significant decline in gross receipts or a suspension of operations due to government orders related to COVID-19. Second, they must continue to pay employees throughout the pandemic.

Eligible employers can claim the ERTC on their quarterly payroll tax returns. The credit covers wages paid from March 13, 2020, through December 31, 2021. For the first two quarters of 2021, eligible employers can claim up to $7,000 in credit per employee per quarter. The maximum credit available for each employee in 2021 is $21,000.

Business owners who qualify for the Paycheck Protection Program (PPP) loan are also eligible for the ERTC. However, they cannot claim the tax credit on wages that are paid using PPP funds.

The ERTC can provide much-needed relief to businesses struggling to retain their workforce during the pandemic. It can help employers save thousands of dollars in payroll costs and help protect their employees from layoffs or reduced hours. Employers should consult with a qualified tax professional to determine their eligibility for the ERTC and to ensure compliance with the requirements of the law. Law firms can provide professional assistance to eligible businesses seeking to claim the ERTC. An employee retention tax credit lawyer can help midsize and small businesses maximize their credit while remaining compliant with the internal revenue service (IRS) regulations.

Yes. To qualify for the ERTC, you may only need to qualify for a single factor. Reduction in revenue is only one of those factors. To be sure, The Nominal Impact Test may be utilized to gauge other means of profitability which may be less clear than pure capital.

Yes. As long as any funds from the PPP loans that were allocated to payroll expenses have been appropriately accounted for before starting the process of the ERTC, you will still qualify. This is covered by our tax attorneys in the initial analysis.

Many CPAs refer to the Revenue Reduction Test to gauge a business qualification for the ERTC, as opposed to the Nominal Impact Test due to its complexities. They have widely left these qualitative factors to ERTC tax attorneys.

The ERTC is not specific to any industry, the only businesses disqualified are those directly related to federal or state government. Any private business, as well as non-profits, are eligible.

To access the ERTC, there is no minimum number of employees a business must have. There is, however, a maximum number of employees. This number rose from 100 in 2020 to 500 in 2021.

This program has gone through many stages since it was incepted, which created multitudes of confusion and misinformation. Hundreds of pages within the CARES act, along with executive orders from the former and current presidencies make up the ERTC.

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