Is There Still Time to Claim the Employee Retention Credit (ERC)?
The COVID-19 pandemic and the resulting economic upheaval sparked a series of financial relief packages, each with various complicated updates and provisions. In particular, the
Originally passed in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Employee Retention Credit (ERC) was designed to encourage employers to keep employees on payroll throughout the pandemic, even if they were not actively working.
Eligible employers can claim this refundable tax credit against qualified wages and health plan expenses paid to their employees. The ERC is available to employers that operated during the pandemic and experienced either a significant decline in gross receipts or a full or partial suspension of business operations due to government orders.
ERC is available to any trade or business as long as they meet one of these two criteria:
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| 2020 (03/20 - 12/20) |
2021 Q1 & Q2 |
2021 Q3 |
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|---|---|---|---|---|
| Max Credit Per Employee | $5,000 Per Quarter | $7,000 Per Quarter | ||
| Revenue Qualifier | 50% Gross Receipts Decline vs 2019 same quarter | 20% Gross Receipts Decline vs 2019 or 2020 same or prior quarter. Employers that did not exist in 2019 can use 2020 revenue numbers. | ||
| Partial or Full Suspension Qualifier |
The operation of a trade or business is partially suspended if a government authority imposes restrictions on the employer's operations by limiting commerce, travel, or group meetings due to COVID-19 such that the employer can still continue, but not all of its typical operations. | |||
| Governmental Orgs | None | Public Colleges, universities, organizations whose principal purpose is providing medical or hospital care, certain federal instrumentalities like credit unions. | ||
| Recovery Startup Business | None | Business beginning operations after Feb 15, 2020 qualify regardless of revenue or shutdown orders. Max $50,000 per quarter | ||
| Can claim PPP & ERC | Yes | |||
The COVID-19 pandemic and the resulting economic upheaval sparked a series of financial relief packages, each with various complicated updates and provisions. In particular, the
During the pandemic, employee retention became a widespread problem amongst businesses. Between 2020 and 2021, Congress passed legislation that assisted businesses during the financial downturn.
What is the Employee Retention Credit? The Employee Retention Credit (ERC) is a refundable tax credit that businesses can claim on qualified wages, including certain
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