Do You Qualify for the Employee Retention Tax Credit?
You might be surprised. Find out in 3 minutes or less.
Please note: The QuickTest works best for organizations with at least one full-time employee – it doesn’t work well for most sole proprietors.
The expanded Employee Retention Tax Credit (ERTC) provides welcome relief for businesses and organizations hardest-hit by the global pandemic. Optimizing the credit for the best possible impact can be complex – especially if you have FFCRA or other wage-based credits.
Here’s what you need to know.
2021 ERTC qualifications
For 2021, the cap increases to up to $21,000 per employee ($7,000 per quarter for Q1-Q3).
Here’s an overview of other 2021 changes:
- The definition of operations suspended by a government authority is expanded to include orders limiting commerce, travel, or group meetings due to COVID-19.
- The government order suspension is expanded to include suppliers that provide a key component of your product being partially or fully suspended due to a government order.
- Essential businesses may qualify for the credit if one of their operations or one of their affiliates was fully or partially suspended by a government order.
- Employee numbers increased to 500 or fewer (up from 100 or fewer) and more than 500 (up from more than 100).
- If the business experienced a 20% reduction in gross receipts compared to the same calendar quarter in 2019 (Not 2020!) – you also have the option to compare the immediately preceding quarter to the corresponding quarter of 2019.
- Qualified wages must be paid between January 1, 2021, and September 30, 2021.
- The maximum of qualified wages increases to $10,000 per employee per quarter with a 70% tax credit rate – for a maximum of $21,000 per employee for 2021.
2020 ERTC qualifications
For 2020, the ERTC is capped at $5,000 per employee. You may qualify for the 2020 ERTC if:
- Operations were fully or partially suspended by a government order, or
- A supplier that provides a key component of your product was partially or full suspended due to a government order, or
- An essential business had one of its operations or one of its affiliates fully or partially suspended by a government order, or
- Gross receipts were less than 50% compared to the same quarter in 2019, or
- You experienced a decline in gross receipts of 20% or more during the first two quarters of 2020 compared to the same two quarters in 2019
NOTE: Obtaining a PPP loan does NOT disqualify you from the ERTC. And, credits for 2020 can be obtained retroactively – it’s not too late!
What happens next?
A member of our COVID-19 Advisory Team will review your Quick Test results and contact you with recommendations and next steps.
The Barnes Dennig COVID-19 Advisory Team has prepared analyses for well over 100 taxpayers – and the deliverable we provide you includes calculations and underlying support of the calculations. Plus, we prepare the amended 941s requesting the tax refund – signed by a CPA.
Timing is everything – true-up calculations are due just days after the quarter’s last payroll. Working with a qualified tax professional can give you the peace of mind you need to focus on the future. Take the Quick Test now.
Barnes Dennig COVID-19 Advisory Team
- Cheryl Ganim – cganim@barnesdennig.com
- Andy Bertke – abertke@barnesdennig.com
- Matt Rosen – mrosen@barnesdennig.com
- Ryan Lauer – rlauer@barnesdennig.com
- Nick Pennekamp – npennekamp@barnesdennig.com
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