By now, many business owners have probably heard about the Employee Retention Tax Credit, also known as the ERC or ERTC. Employers who are aware of the program likely know they can get an ERTC refund if they kept people employed through the early months of the COVID-19 pandemic. But specific details, like whether there are any wage limits for eligible employees under the ERTC, are not as well-known.
ERTC Qualified Wages
When it comes to the ERTC, qualified wages are payments given to employees while a business’ operations underwent partial suspension or were stopped entirely, and/or payments from a time when a business suffered a significant decline in gross receipts due to pandemic-related government limitations.
Qualified wages can include salaries, hourly wages, insurance payments, paid vacations, some health plans, and more. If you have specific questions about what might count for your business, you may want to consult with tax professionals particularly skilled in dealing with the Employee Retention Tax Credit, like the team at Dayes Law Firm.
Wage Limits for Eligible Employees Under the ERTC
Yes, there are wage limits when it comes to claiming for eligible employees under the ERTC for tax years 2020 and 2021.
As a business owner, you can claim a maximum ERTC of $10,000 per employee at a rate of 50 percent, or $5,000 per employee for the entire year. In 2021, only Q1, Q2, and Q3 of 2021 are eligible for ERTC. For those quarters, the wage limit increased.
For tax year 2021, the limit is $10,000 per employee per quarter, with a rate of 70 percent, for a total of $7,000 per quarter. Because the last quarter of that year is excluded, the credit amount can potentially equal $21,000 per eligible employee.
In total, you could potentially claim up to $26,000 per employee if you kept staff on payroll through those quarters in the early months of the coronavirus pandemic.
Calculating the ERTC
Calculating the ERTC can get tricky. You have to be sure you have all of the qualified wages correct, that you claim the right number of employees, that you don’t collect a refund for qualified wages through ERTC if you already claimed Paycheck Protection Program (PPP) loan forgiveness for the same wages, and more.
To make sure you get all the details right and don’t potentially incur the wrath of the IRS, it might be in the best interests of your business for you to work with an ERTC team that has already assisted many businesses with their claims. That’s how Dayes Law Firm can help.
Our firm has a record of success when it comes to handling ERTC applications for businesses. Dayes Law Firm and our partners have helped businesses file for more than $250 million in ERTC refunds so far, and our clients have already received over $25 million in funds for Employee Retention Tax Credit claims.
Please contact us today for a free, no-obligation consultation about your ERTC options. Our team can discuss any of your questions or concerns about the program, and you are under no obligation to work with us after the initial evaluation. Give us a call at 866-684-8114 to learn more!