How to Qualify for the Employee Retention Credit

Are you an employer who has struggled with the negative lingering effects of the Coronavirus Pandemic? Whether the government-mandated a partial or full shut down of business or you experienced a significant decline in your business receipts, there may be funds available to get your company back on track and offer you some peace of mind.

The Employee Retention Credit is a refundable tax credit against certain employment taxes. Here is what you need to know:

Employee Retention Credit (ERC) 2020:

  • Your business is eligible for the 2020 ERC if one of the two following conditions applies:
    • Your business experienced a full or partial shutdown of business operations due to a government order, or;
    • Your business experienced a decline of 50% or more in gross receipts quarter over quarter compared to the same quarter in 2019.
  • Qualified wages are any wage paid after March 12, 2020, through December 31, 2020 (excluding any qualified sick or family leave wages paid under the CARES Act).
  • Wages used to support forgiveness of a PPP loan during 2020 must be excluded from the Employee Retention Credit calculation.
  • Credit equals 50% of eligible wages per year per eligible employee, up to a maximum of $10,000 in wages per employee.

Employee Retention Credit (ERC) 2021:

  • Your business is eligible for the 2021 ERC if one of the two following conditions applies:
    • Your business experienced a full or partial shutdown of business operations due to a government order.
    • Your business experienced a decline of 20% or more in gross receipts quarter over quarter compared to the same quarter in 2019.
  • Qualified wages are any wage paid from January 1, 2021, through June 30, 2021 (excluding any qualified sick or family leave wages paid under the ARP Act).
  • Wages used to support forgiveness of a PPP loan during 2021 must be excluded from the Employee Retention Credit calculation.
  • Credit equals 70% of eligible wages per quarter per eligible employee, up to a maximum of $10,000 in wages per employee.

If the scenarios above ring true for your company and you feel you could benefit from the credit, reach out to one of your trusted Anderson ZurMuehlen accountants for information. We offer educated and experienced staff members that assist in your company’s Employee Retention Credit calculation. We are just a phone call away!

This article was written by Jinnie Nichols, Senior in our Great Falls office location.

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