The Employee Retention Tax Credit (ERC/ERTC) has proven to be an important financial incentive for many businesses. There are a number of steps you can take to determine your eligibility for the ERTC and the benefits you and your business may be able to receive to get that same financial boost that other businesses have already taken advantage of. 

ERTC Program 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act introduced the Employee Retention Credit in March 2020. 

The ERTC is a refundable tax credit that was created to encourage employers to keep their employees on payroll during a tough financial period in the early days of the COVID-19 pandemic. ERTC refunds are claimed via an amended payroll tax return and can be claimed for qualifying quarters in 2020 and 2021.

Determining Eligibility for the ERTC

In general, the ERTC is available to all eligible businesses that pay eligible wages to employees. But there are requirements businesses have to meet to qualify. 

To be eligible to claim the ERTC, your business must have experienced fully or partially suspended operations due to government orders during a certain time period – or, if your business underwent a substantial decline in gross receipts during a quarter in that time period when compared to the same quarter in 2019, it may be eligible to claim the Employee Retention Tax Credit.

Regarding that time period, the ERTC is available to eligible employers for wages paid from March 13, 2020, through December 31, 2021. 

Gross Receipts Eligibility and Qualified Wages

To qualify for the ERTC, your business’s gross receipts for a calendar quarter in 2020 must have been less than 50 percent of the gross receipts for that same quarter in 2019 – or at least a 20 percent decline from 2019 to 2021. 

Plus, you’ll need to determine your total qualified wages for 2020 and 2021 and be prepared to show documentation proving your claim. In 2020, businesses can claim up to $5,000 per employee, and for 2021, the credit can earn you up to $7,000 per employee per quarter, for a total of $21,000 for 2021.

Employees and the ERTC

The number of employees you had on staff matters for the purpose of being eligible for the ERTC too. 

The total number of full-time equivalent employees (FTE) at your business must be calculated to determine Employee Retention Credit eligibility. An FTE is defined as an employee who averages at least 30 hours of service per week or 130 hours per calendar month.

According to the IRS, the ERTC was applicable to businesses with 100 or fewer full-time employees for the year 2020. But when it comes to amending tax returns for 2021, the number of employees allowed for the business to be considered a small employer increased to 500 or fewer full-time staff members.

ERTC Eligibility Assistance 

You may decide that working with a qualified tax professional like the ones on the team at Dayes Law Firm for ERTC eligibility assistance may be in your best interest. Our firm can help you calculate your eligibility and help you with the entire ERTC application process. 

Please feel free to contact us for a free consultation. Every business is different, and we want to help you determine how best to move forward with the Employee Retention Tax Credit based on the specific needs of your enterprise. 

Give us a call at 602-888-2900 or fill out the form on this page to get in touch today!