Employee Retention Credit ERC - Everything You Need To Know

Employee Retention Credit (ERC): Everything You Need To Know

Learn about the Employee Retention Credit and how it can benefit your business. This article covers eligibility, calculation, and how to claim the credit. Don’t miss out on valuable savings for your business.

What Is Employee Retention Tax Credit (ERTC)?

Employee Retention Tax Credit (ERTC) is a tax credit that was created by the CARES Act to help businesses keep their employees on payroll during the COVID-19 pandemic. The credit is designed to reimburse employers for a portion of the wages they pay to their employees during the pandemic. The credit is also referred to as the Employee Retention Tax Credit (ERTC).

The ERC is available to employers of all sizes, including businesses, non-profit organizations, and government entities. To be eligible for the credit, the employer must have experienced a full or partial suspension of their operations due to a government order related to COVID-19, or have experienced a significant decline in gross receipts.

The credit is equal to 50% of the qualified wages paid to each employee, up to a maximum of $10,000 per employee for all calendar quarters. For employers with more than 100 employees, the credit is based on wages paid to employees who are not providing services because of the pandemic. For employers with 100 or fewer employees, the credit is based on all wages paid to employees during the pandemic.

To claim the credit, employers must complete and file Form 941, Employer’s Quarterly Federal Tax Return. The credit can also be claimed on the employer’s annual Form 944, Employer’s Annual Federal Tax Return, or Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

The ERC is available for wages paid between March 13, 2020 and December 31, 2020. However, the credit is not available for any wages that are also used to claim the payroll tax credit provided by the Families First Coronavirus Response Act.

The ERC is a refundable credit, which means that if the credit exceeds the employer’s federal employment tax liability, the excess will be refunded to the employer. Employers can also elect to claim the credit against their payroll tax liability, instead of claiming it as a refundable credit.

We know you probably have questions or feel a bit overwhelmed, we understand, that’s why we’re here, to answer ALL of your questions for FREE! Go ahead and click the button below to schedule a one on one call with one of our ERC experts that not only will they answer ALL of your questions, but they will also GUIDE you through the entire ERC filing process. They do ALL the work and deal with the IRS in your behalf. We will NEVER ask you for your credit card or any up-front fees, so relax and schedule the call right now!

Do I Qualify For The Employee Retention Credit (ERC)?

If during the pandemic, you as a business owner experienced any of the below, then you qualify for ERC credit!

You/Employees/Customers had to wear face masks in your building during the pandemic
You/Employees/Customers had to implement “social distancing” in your building during the pandemic
You/Employees had to sanitize your work area during the pandemic
You/Employees had to limit the number of customers in your building during the pandemic
You had to cut down on employees during the pandemic
You were forced to have your employees telecommute (work from homes) during the pandemic
You were forced to partially or fully close your business during the pandemic
If you were forced to have your Restaurant’s customers eat outside instead of inside
If you were forced to have your Restaurant’s customers come & pick up their orders instead of dinning in
If you were forced to have your Restaurant’s orders to be delivered instead of dinning inside

If ANY of the above happened to you and your business, than you qualify for the ERC credit which is a Grant provided by the IRS.

And best of all, even if you already claimed your Paycheck Protection Program (PPP) loan, YOU still qualify for the ERC money, and after you claim your ERC money, you will be able to do whatever you want with the money, there are NO restrictions, is totally up to you and you will never need to pay this money back because is NOT a loan, is a GRANT!

Is It Possible To Receive Both The Employee Retention Credit (ERC) and PPP Loan Simultaneously?

The Employee Retention Credit (ERC) and Paycheck Protection Program (PPP) loan can both be utilized by employers. However, it is important to note that salary expenses covered by a PPP loan cannot be included in the calculation for the ERC.

Additionally, the PPP loan is typically only available for 8-10 weeks of labor expenses, while the ERC has a longer eligibility period. Businesses can use PPP funds to cover non-wage expenses, and it is crucial to maintain accurate records to separate PPP funds used for the entire 24-week Covered Period for ERC purposes.

The credit can also be claimed on the employer’s annual Form 944, Employer’s Annual Federal Tax Return, or Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

It’s worth to mention that the ERC credit was extended and modified under the Consolidated Appropriations Act, 2021, which was signed into law on December 27, 2020. The extension was made to cover wages paid between January 1, 2021 and June 30, 2021. The credit amount was also increased to 80% of qualified wages, up to $7,000 per employee for Q1 2021 and 70% of qualified wages, up to $10,000 per employee for Q2 2021.

What Are Employee Retention Credit (ERC) Qualified Wages?

When you want to claim the Employee Retention Credit, the IRS uses special rules to figure out how much money and health expenses you can get credit for. Just like everyone else, the money you get from the Employee Retention Credit and your salary is subject to FICA taxes. Remember, you can only use the credit for money you haven’t already gotten back or aren’t going to get back from the Paycheck Protection Program.

The Employee Retention Credit can also affect something called the Section 199A deduction. This is a special rule that helps some business owners lower their taxes. But, for some business owners the Section 199A might not be allowed, which can make their taxes go up.

The Section 199A deduction is a way for some business owners to lower their taxes from 37% to 30%. This rule was added to a law called the Tax Cuts and Jobs Act because people were upset that big companies’ taxes were going down a lot.

When a company is figuring out how much money they can get credit for with the Employee Retention Credit, they have to look at how many people they have working for them. For example, a full-time contractor who worked 30 hours per week in 2020 would count as a full-time employee under the Affordable Care Act.

One way to see if you qualify for the ERC is to calculate the number of full-time employees you have. You do this by taking the total number of full-time staff you have and dividing that by the number of months your business has been open.

For example, if you have 10 full-time employees and your business has been open for 6 months, your calculation would be 10/6 = 1.67. This means you have 1.67 full-time employees. If you are a business that started in 2021, like a rehabilitation startup, the ERC may be available to you in 2022 if you are doing commercial operations.

Does The Employee Retention Credit (ERTC) Have The Same Benefits For Big And Small Employers?

Bigger businesses can only get money for employees who are not working. To see if you qualify for the ERC, you can fill out a worksheet with information about your employees and how much money you paid them.
This worksheet will ask for things like your financial statements, information about a loan you might have gotten, and how many employees you have.

The ERC can give you up to $7,000 for each employee every quarter in 2021 and more in 2022.
For example, a company with 10 employees that qualifies for the whole year of 2021 and the first two quarters of 2022 could get up to $240,000 in ERC money. Even if you thought you didn’t qualify before, new changes to the program might make it possible for your business to get ERC money. It’s easy to apply, so you have nothing to lose.

How Do You Figure Out If An Employer Is A Large Or Small Employer For The Employee Retention Credits (ERTC)?

The Employee Retention Credit (ERC) is available to both small and large employers, but the qualifications for each may differ. For 2021, a small employer is defined as one with less than 100 regular full-time employees, while a large employer is one with 500 or more full-time employees.

According to section 4980H of the Code, a full-time employee is someone who works at least 30 hours per week or 130 hours per month in 2019. To calculate the number of full-time employees, employers can add the number of regular staff in each calendar month in 2019 and divide the total by 12.

However, businesses that were not in operation for the entire year of 2019 may be subject to special regulations. Additionally, the legislation extends the ERC tax credit of 40% of profits (up to $6k per person) to employers operating in government-declared disaster zones for events occurring after December 31, 2019 and continuing for 60 days after the bill’s passage.

Do Religious Organizations, Including Churches, Qualify For The Employee Retention Credit (ERTC)?

The Employee Retention Credit (ERC) is a valuable benefit that has been extended to churches and other religious organizations that have experienced significant reductions in gross income as a result of government-mandated capacity restrictions on meetings.

These organizations may be eligible for the ERC, which serves as an incentive for employers to continue providing wages to their employees during the COVID-19 public health emergency.
The ERC has been extended and expanded by the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021, providing much-needed financial support to these organizations during these challenging times.

What are the qualifications for the Employee Retention Credit (ERC)?
Here’s a very small list of the types of Businesses that qualify for the Employee Retention Credit.

Restaurants
Fitness Centers
Hotels, Beauty Salons
Car Wash, Gas Stations
Grocery Stores
Car Dealers
Day Care
Transportation Services
Delivery Services
Senior Living / Retirement Homes
Non-Profit organizations
Real Estate and Construction industries
Educational institutions
Healthcare and Life Sciences sectors
Technology companies
Professional services firms
Government Contractors
Hospitality and Retail businesses
Industrial companies
And Lots More!

Employee Retention Credit (ERC) Sources And References

The IRS Notice 2021-20 offers instructions for employers seeking the Employee Retention Tax Credit (ERTC) for qualified wages paid between March 12, 2020 and September 30, 2021. The notice mainly reiterates previously published ERTC FAQs on the IRS website. It also includes information on how employers who received a PPP loan can retroactively claim the ERTC by filing Form 941-X for the relevant quarter(s) in which the qualified wages were paid. The notice includes three examples in Q&A No.57 to demonstrate the process.

The Employee Retention Tax Credit (ERTC) is the largest Government Stimulus Program In History, and as a leading provider of government recovery services with over 15 years of experience, we are proud to offer our expertise in helping businesses claim the Employee Retention Tax Credit (ERTC) with NO upfront fees!

You may also contact one of our ERC Agents/Partner via text/sms to the phone number shown below (tap the image below to send the text).

If you choose this route, please provide the following information in your text.

Your Name and Last Name
Your Business Legal Name
Your Industry (Construction, Food, etc)
Your Position (Owner, CEO, Employee)
How many W-2 full time employees you have
Your Mobile Ph Number you want the ERC expert to call you
The Best Time and Date To Call You (ex: Monday 15th between 10 am and 12:00 noon)

After you send the text with all the information, the ERC Agent will set everything up for you with an ERC expert and you will be contacted back by the Agent to confirm the date and time for your 5 minute call with one of our ERC experts

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