Are There Limits on Wages for the Employee Retention Credit?

October 16, 2023
Dayes Law Firm

Although the Employee Retention Tax Credit (ERTC/ERC) program was first implemented in 2020, some business owners who haven’t yet claimed it may not understand some of the particulars of the program. As an employer, you may have seen claims about massive amounts of money you can get in an ERTC refund, but have no idea how to calculate facts and figures to reach any specific amount in general. 

Qualified wages for the ERTC can include salaries, hourly wages, insurance payments, paid vacations, certain health plans, and more. But are there limits on the amount of wages that can be considered for the Employee Retention Tax Credit?

ERTC Wage Limits

Qualified wages for the ERTC are payments that were given to employees while a business’ operations underwent partial suspension or were fully suspended, and/or payments from a period when a business suffered a significant decline in gross receipts due to COVID-19 pandemic-related government restrictions. And there are indeed wage limits when it comes to claiming wages for eligible employees under the ERTC for eligible tax periods

Business owners can claim a maximum ERTC of $10,000 per employee at a rate of 50 percent, or $5,000 per employee for the entire 2020 tax year. That’s in terms of wages paid after March 13, 2020, and before December 31, 2020. 

For 2021 wages, those limits increase to $10,000 per employee per quarter, with a rate of 70 percent, or a total of $7,000 per quarter. Since only Q1, Q2, and Q3 of 2021 are eligible for the Employee Retention Tax Credit, the credit amount maxes out at $21,000 per eligible employee.

As an employer, you could potentially claim up to $26,000 per employee. That’s a significant amount of money you don’t want to leave on the table if you’re eligible to claim the ERTC.

Getting Assistance with the ERTC

If all of those numbers are confusing to you, don’t be too concerned. There are tax professionals who are adept at helping businesses apply for the ERTC who can help you if you feel like you need a little extra assistance as a business owner

At Dayes Law Firm, for instance, our team and our partners have already helped businesses file for more than $250 million in ERTC refunds so far. The clients we have assisted with the Employee Retention Tax Credit have received over $25 million in funds for claims, and many other claims we’ve helped with are still being processed. 

If you want to be sure you claim the correct amount of eligible wages for the ERTC, we can help. We can help make sure all of the information sent to the IRS for your claim is thoroughly checked for accuracy and help you dot the I’s and cross the T’s on your application. 

In addition, our team can help you if you find yourself audited by the IRS in regard to your Employee Retention Tax Credit claim. We offer a free consultation on any of your ERTC questions, including any concerns you may have regarding an audit. Not only that, but we will defend any businesses we work with on an ERTC application with any audits or if there is ever a request for an audit in the future.

Dayes Law Firm attorneys are more than happy to discuss any of your questions or concerns about the Employee Retention Tax Credit in a free, no-obligation consultation. Please feel free to contact Dayes Law Firm today to get in touch and determine how we can assist you and your business with its unique circumstances and specific eligible wages to consider. Call (800) 503-2000 to learn more today!